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UPDATE 2-Argentina cenbank hikes benchmark rate to fight inflation

·1 min read

(Adds comments, data)

BUENOS AIRES, Aug 11 (Reuters) - Argentina's central bank raised its benchmark interest rate by 950 basis points to 69.50%, on Thursday, as the country struggles to keep a lid on spiraling inflation.

The benchmark 'Leliq' rate for the 28-day term was set at 69.5%, shooting up from the previous 60% annually. The central bank's announcement comes ahead of the release of July inflation figures, expected to reach 7.2%, according to a Reuters poll.

The decision aims to normalize its interest rate structure, the bank said in a statement, adding that it aims at bringing rates closer "to a positive terrain in real terms."

A positive real interest rate is one of the points agreed between Argentina and the International Monetary Fund (IMF) in a recent agreement.

"The rise in the policy rate will help reduce inflation expectations for the remainder of the year and consolidate the financial and exchange stability," it added.

In late July, the central bank hiked rates by 800 basis points as the government shuffled its cabinet, including the installation of an economy "superminister."

Inflation, which is predicted to hit 90% by the end of the year, as well as crippling debt and chronic overspending, are top of the list for Economy "Superminister" Sergio Massa to tackle.

The central bank also established a new floor of 69.5% per year for 30-day deposits up to 10 million pesos.

A positive real rate is one of the points agreed between Argentina and the IMF in a recent agreement. (Reporting by Walter Bianchi; Writing by Kylie Madry; Editing by Anthony Esposito and Christian Plumb)