By Jorge Otaola
BUENOS AIRES (Reuters) – Argentina’s central bank is expected to adjust its benchmark interest rate that is currently at 133%, two bank sources told Reuters on Thursday, looking to protect local currency deposits after the presidential election win of a radical libertarian.
“There is going to be a rate hike,” said the first source, who asked not to be named as the decision was not yet finalized. The source did not know what the size of the hike would be.
A second bank source close to the board said there would be a rate adjustment, without giving further details. Argentina’s central bank board normally meets weekly on Thursday.
The planned move comes after libertarian economist Javier Milei won the South American country’s presidential runoff election on Sunday, with campaign pledges to dollarize the economy, close the central bank and abruptly cut spending.
He will take office on Dec. 10, replacing outgoing center-left Peronist President Alberto Fernandez, whose popularity nose dived as the country slumped into its worst economic crisis in two decades, with poverty over 40% and a recession looming.
Argentina has annualized inflation nearing 150%, negative net foreign currency reserves and a sliding peso, kept only in check by strict currency controls, which though have spawned parallel exchange rates far away from the official one.
Analysts said that a potential rate hike aimed to stem recent signs of outflows of peso deposits from local banks into dollars as savers looked for a safe haven against potential reforms Milei makes once in office.
(Reporting by Jorge Otaola; Writing by Adam Jourdan)
