The Mauricio Macri government enjoyed some relief on Tuesday as the Central Bank successfully rolled over 76 percent of 529.32 billion pesos (US$ 19 billion) worth of short-term peso-denominated bonds known as Lebacs.
The result was three-percentage points higher than the Central Bank’s expectations, with the entity led by Luis Caputo also shaving half a percentage point off interest rates offered in the last roll-over of Lebacs, from 47 to 46.5 percent.
The news came just hours after the INDEC statistics bureau announced the highest rate of monthly inflation in two years, with June inflation coming in at 3.7 percent.
The roll-over of Lebacs was larger than last month’s and exceeded market expectations. In June, the entity had renewed just 60 percent of expiring Lebacs despite a record interest rate on the short-term note of 47 percent.
June’s inflation figure – which was led by increases in transport (5.9 percent), food and non-alcoholic beverages (5.2 percent) and healthcare (4.3 percent) – means that prices have risen 16 percent in the first half of the year alone, with annual inflation over the last 12 months reaching 29.5 percent, one of the world's highest registered rates.
Consumer prices had reached 2.1 percent in the previous month, and 26.3 percent in the 12 months through May.
Last December, the government set a 15-percent target for the whole of 2018, though officials were forced to lower expectations following the impact of the peso’s fierce devaluation in the second quarter, which saw it drop by 30 percent. That prompted the government to seek a US$50-billion financing deal with the International Monetary Fund (IMF).
INDEC’s latest data means the government's original target has now been surpassed in the first six months of the year alone.
Private consultancy firms have predicted that annual inflation will come in at around 30 percent and forecast lower rates of growth.