Argentina’s central bank held its benchmark seven-day interbank lending rate at 27.25% on Wednesday, the monetary authority said in a statement, amid an increase in inflation expectations and “mixed signals” in prices so far this year.
The central bank had lowered rates in each of the prior two decisions it had taken since the president Mauricio Macri administration loosened its 2018 inflation target to 15%, from 8-12% previously. The bank had said that change allowed it to moderate its contraction bias.
But the monetary authority’s monthly survey of economists published earlier this month revealed that median inflation expectations had increased to 19.4% for 2018, up from 17.4% previously and well above the government target.
“Given that high-frequency indicators show mixed signals regarding the evolution of prices in the first weeks of the year, the central bank decided it should act cautiously,” the statement read.
Argentina’s official Indec statistics agency is expected to publish January inflation data on Thursday. Consumer prices rose 24.8% in 2017, well above the government’s target range of 12-17% inflation.