March 7, 2017 / 8:48 PM / a year ago

Argentina central bank holds rate, citing volatility in prices

BUENOS AIRES, March 7 (Reuters) - Argentina’s central bank kept its monetary policy rate unchanged at 24.75 percent on Tuesday, noting that volatility in monthly consumer price changes warranted a cautious attitude and reiterating that inflation likely ticked up in February.

In a statement, the central bank also noted that economists’ median inflation expectations in its monthly survey remained at 20.8 percent for 2017, above its target range of 12-17 percent. Consumer prices rose around 40 percent annually in 2016.

The central bank had previously warned that February inflation would be higher than in recent months, due largely to increases in regulated prices. The government hiked electricity rates last month as part of its effort to cut subsidies and reduce the fiscal deficit.

But the monetary authority added that the indicators it monitors suggested that “during the month of March the disinflation process would take place within the central bank’s expected path.”

Consumer prices in greater Buenos Aires rose 1.3 percent in January, 1.2 percent in December and 1.6 percent in November.

The central bank has kept rates unchanged since late November.

This month, the central bank began making interest rate decisions every two weeks, rather than every week, as it moves to provide more stability and certainty. (Reporting by Luc Cohen; Editing by Richard Chang)

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