September 6, 2016 / 10:17 PM / 2 years ago

Argentina central bank cuts reference rate for 6th straight week

BUENOS AIRES, Sept 6 (Reuters) - Argentina’s central bank cut its 35-day reference rate by 50 basis points on Tuesday, the sixth cut in as many weeks as policymakers try to revive the local economy amid signs of lower inflation.

The bank cut the rate to 27.75 percent, a move aimed at pushing cash into the real economy by making short-term central bank notes less attractive to investors. The tactic helps gross domestic product grow but can also be inflationary.

“The monetary authority will continue proceeding cautiously, looking for the disinflation process observed in recent months to continue over time,” the central bank said in a statement.

Inflation was 2.0 percent in July, down from 3.1 percent in June and 4.2 percent in May, when the official Indec statistics agency issued its first consumer price report since President Mauricio Macri took office in December.

Macri ordered a reform of the agency to make Argentina’s statistics more credible after his predecessor was accused of sugar coating data.

Finance Minister Alfonso Prat-Gay said last week inflation was expected to be less than 1 percent in August.

Inflation in Argentina will likely end 2016 at 38.6 percent before falling to 19.3 percent in 2017, a poll of economists published by the central bank showed on Friday.

The government statistics agency said gross domestic product shrank 0.7 percent in the first quarter of the year from the last quarter of 2015, confirming a third consecutive quarter of negative growth.

Macri’s government expects the economy to contract by 1 percent this year and grow by 3.5 percent in 2017. (Reporting by Caroline Stauffer; Editing by David Gregorio)

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