BUENOS AIRES May 16 Argentina's central bank
hiked interest rates on its short-term securities on Tuesday,
continuing its bid to soak up pesos and rein in stubbornly high
inflation even as it buys dollars and checks the strengthening
of the peso currency.
The monetary authority sold 448 billion pesos ($28.79
billion) in Lebac securities in its monthly auction, with a
yield of 25.5 percent on the short-term 35-day instrument. That
was up from a yield of 24.25 percent on 35-day Lebacs in last
The rate hike comes as the central bank seeks to establish
credibility for its new inflation targeting regime after data
published last week showed consumer prices rose more than 2
percent for the third consecutive month in April.
The bank is targeting inflation of between 12 percent and 17
percent for 2017, though economists see it at 21 percent.
Consumer prices rose 40.9 percent in 2016 as center-right
President Mauricio Macri allowed the peso currency to float and
began unwinding utilities subsidies shortly after taking office.
Analysts say the central bank's anti-inflationary policies
run counter to its perceived aim to curtail peso currency
appreciation. The central bank has stepped up its purchases of
U.S. dollars in the local foreign exchange market this month
after purchasing none in April.
The central bank no longer considers the 35-day Lebac its
benchmark interest rate, turning instead to the seven-day
interbank lending rate at the start of this year. It hiked that
rate to 26.25 percent in April in response to 2.4 percent
inflation in March, though it has since chosen twice to hold the
($1 = 15.5590 Argentine pesos)
(Reporting by Walter Bianchi; Writing by Luc Cohen; Editing by