April 1, 2019 / 2:28 PM / 7 months ago

UPDATE 1-Argentina sets interest rate floor as inflation bites

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BUENOS AIRES, April 1 (Reuters) - Argentina has established an interest rate floor of 62.5 percent, the central bank said in a statement on Monday, as the country looks to rein in stubborn inflation and ease concerns about a run on the local peso currency.

The country’s benchmark interest rate, set by daily auctions of short-term “Leliq” notes, was 68.155 percent on Friday as the central bank looks to protect the embattled peso and contain inflation running at an annual rate in excess of 50 percent.

The central bank said in a statement that it would continue to “strictly control” liquidity in the market “to support a minimum rate of 62.5 percent during the month of April.”

The bank said it anticipated inflation would remain elevated. “High-frequency data indicates that inflation will be high for March and April,” the bank said.

The peso lost almost 10 percent of its value against the dollar in March, which in turn forced interest rates up sharply.

The renewed market volatility, after a comparatively calm start to the year, has renewed jitters in the country about what lies ahead for the recession-hit nation, which is setting itself for the presidential election toward the end of the year - a contest that could pit incumbent President Mauricio Macri and against his predecessor, Cristina Fernandez.

The peso strengthened 1.29 percent at open on Monday, following moves last week by the central bank to support the currency.

Reporting by Eliana Raszewski and Adam Jourdan Editing by Chizu Nomiyama and Steve Orlofsky

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