Argentina analysts watch for inflation reading, possible rate cut

By Thomson Reuters Apr 8, 2024 | 9:15 AM

By Walter Bianchi

BUENOS AIRES (Reuters) – Argentina economic and markets analysts expect a busy week: a potential further slowdown in monthly inflation from its sky-high level and a possible rate cut as the government grows bolder about its progress reining in prices.

The embattled South American country’s government has said monthly inflation should have cooled to around 10% in March, with official figures released at the end of the week, marking another deceleration from a peak over 25% in December.

That’s raised the prospect of a further cut to the benchmark interest rate after it was trimmed to 80% last month from 100%. Libertarian President Javier Milei reposted an article on social platform X on Sunday that suggested a rate cut was coming.

“If inflation shows another sign of strong deceleration, it is very likely that there will be another rate cut,” said local economist Roberto Geretto.

“If the CPI (consumer price index) for March…is around 10% as the government says, it would be lower than expected and mark a notable improvement.”

Argentina is battling to bring down one of the world’s highest inflation levels, with the annual rate over 275%, even as it faces growing poverty, stalling economic activity and the impact of strict capital controls that stymie business.

Milei’s tough economic medicine, however, has gone down well with markets, propelling bonds and helping stabilize the peso currency. He faces, though, a challenge to get the economy going again before economic hardship sparks social unrest.

(Reporting by Walter Bianchi; Editing by Kirsten Donovan)