In September, Argentina’s currency devaluation rate increased, prompting the country’s Central Bank to also raise interest rates. The nation’s prime interest rate was hiked from 118% to a staggering 133% on Wednesday, as reported by Reuters.
Data up until September revealed a monthly devaluation rate of 12.7% and an annual rate of 138%. The surge in prices has hit Argentinian citizens hard, causing a decline in purchasing power and savings. Reuters noted that out of every five Argentinians, two are now grappling with poverty due to the escalating cost of living.
Some analysts have accused Argentina of being sluggish in raising interest rates, contributing to the crisis. The Central Bank has been struggling to strike a balance in aligning benchmark interest rates with inflation expectations.
A survey conducted by analysts predicts that by the end of this year, Argentina’s devaluation rate may reach a staggering 180%, according to Reuters. The government’s decision to devalue the national currency ‘Peso’ by nearly 18% in August has further exacerbated the situation.
During the same period, the Central Bank had already increased interest rates from 97% to 118%.