January 3, 2017 / 9:35 PM / in 2 years

Argentina central bank sets new 7-day reference rate at 24.75 pct

BUENOS AIRES, Jan 3 (Reuters) - Argentina’s central bank on Tuesday announced a seven-day monetary policy rate of 24.75 percent, unchanged from the 35-day reference rate it has maintained for the previous four weeks.

The bank released a statement saying that December inflation was likely to be under 1.5 percent. Such a figure would show that consumer prices are falling in line with the bank’s inflation objectives.

In September, the bank said it will continue to set its policy rate on a weekly basis in 2017 but no longer tie the rate to short-term Lebac securities. It will instead use the seven-day interbank lending rate as its reference rate.

Earlier on Tuesday the bank released a poll of analysts predicting an increase in 2017 and 2018 inflation expectations.

Despite the fact that the new estimates are further outside the bank’s target inflation range of 12 percent to 17 percent in 2017 and 8 percent to 12 percent in 2018, the statement said consumer prices should keep moving in the right direction.

“The central bank will continue to maintain a clear anti-inflationary bias to ensure that the disinflation process continues toward its target of inflation between 12 percent and 17 percent during this year,” the statement said.

Consumer prices rose about 40 percent in 2016 with the economy in recession. The bank began targeting inflation last year after unorthodox monetary policymakers under Argentina’s previous president, Cristina Fernandez, unsuccessfully relied on printing pesos to keep the economy afloat during her two terms. (Reporting by Walter Bianchi; Writing by Hugh Bronstein; Eiting by Steve Orlofsky)

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