BUENOS AIRES, Oct 18 (Reuters) - Argentina’s central bank kept its reference rate unchanged at 26.75 percent for the fourth straight week on Tuesday as it sought to lower inflation expectations.
The four weeks of steady policy come after eight consecutive weeks of cuts, as market expectations for inflation both this year and next have exceeded official forecasts.
A central bank poll of economists this month showed expectations for inflation of 39.6 percent in 2016 and 20 percent in 2017. The bank’s inflation target for next year is 12 to 17 percent, while the government sees it at 17 percent.
“To consolidate the disinflation that’s already happened this year, and to advance the process of convergence toward the announced 2017 inflation expectations, the Central Bank has decided to maintain its monetary policy rate at 26.75 percent,” the Central Bank said in a statement.
In a quarterly monetary policy presentation on Tuesday, Central Bank President Federico Sturzenegger said he was inflation would fall and the economy would return to growth next year.
Consumer prices rose 1.1 percent in September, up from 0.2 percent in August but lower than earlier months this year largely because the Supreme Court ordered the government to suspend subsidy cuts that had lifted home heating gas prices.
The government reinstated the subsidy cuts earlier this month, however, meaning consumer prices will likely start to rise again. The central bank is targeting 1.5 percent monthly inflation for the fourth quarter of 2016.
Sturzenegger emphasized that the current pace of monthly consumer price increases represented annualized inflation of less than 20 percent. (Reporting by Luc Cohen; Editing by David Gregorio)