MercoPress. South Atlantic News Agency

Argentina central bank holds benchmark rate at 27.25%; economy expands 4.7% in first two months

The central bank said that inflation would begin to fall in May after a series of hikes in regulated prices end this month

Argentina’s central bank held its benchmark interest rate at 27.25% on Tuesday, reiterating in a statement that high-frequency indicators suggested core inflation would remain high in April, but below March levels.

The bank said that inflation would begin to fall in May after a series of hikes in regulated prices end this month. It said several factors, including salary negotiations, supported the bank’s target of 15% inflation this year. The statement said if inflation fell slower than expected in coming months the bank would raise its policy rate.

Consumer prices in Argentina rose 2.3% in March, slightly down from the 2.4% increase in February. Twelve-month inflation was 25.4%, the same level as February.

The bank said in its twice-monthly policy statement it did not expect significant depreciation of the peso currency in the coming months, after it sold over US$ 2 billion in reserves this year to halt the peso’s slide.

Other economic data from Argentina indicated a trade deficit of US$ 611 million in March, compared with a US$ 910 million deficit in the same month last year, according to an Indec release on Tuesday. It was the country’s 15th consecutive month with a trade deficit. In February the deficit was US$ 914 million.

Likewise Indec reported that the economy expanded 5.1% in February when compared with the same month last year, marking the twelfth straight month of inter-annual growth. However the economy contracted 0.2% in February compared with January. This means the economy expanded 4.7% in the first two months of this year.

Retail, manufacturing, real estate and construction were the most dynamic sectors in February compared to twelve months before. Construction expanded 12.7%; retail, 7.9% and financial services 7.4%. Other eleven positive sectors include manufacturing 5.8%; transport and communications 1.7%; agriculture and livestock, 2.4%; public administration 1.3%; hotels and restaurants 2.8%; mines and quarries 1.7%; education 1.3%; social and health services 1.3%; community and personal services 1% and public utilities, power, gas and water 0.9%. Fisheries was one of the sectors that had negative growth during February.