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Argentina's central bank trims interest rate as inflation eases

BY Reuters | ECONOMIC | 11/01/24 09:36 AM EDT

Nov 1 (Reuters) - Argentina's central bank cut its benchmark interest rate to 35%, from previous 40%, the monetary authority said in a statement on Friday morning, as upward pressure on prices comes down in South America's second-biggest economy.

The cut marks the seventh reduction to the key lending rate under libertarian President Javier Milei, and the first trim since the middle of May.

"The decision is based on the liquidity context (and) the drop observed in inflation expectations," the bank said in a statement, which also pointed to the government's "strengthening of the fiscal anchor."

Milei has presided over tough spending cuts during his roughly 11 months in office, which has also seen poverty rates climb sharply as the economy has entered into recession. (Reporting by Adam Jourdan; Writing by Aida Pelaez-Fernandez)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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