Argentina's central bank board agreed to hike the country's benchmark interest rate by 300 basis points to 78 percent on Thursday, two sources familiar with the matter told Reuters, after annual inflation hit 100 percent for the first time in over three decades.
The decision came after 12-month inflation reached 102.5 percent in February, the first time it has hit triple figures since a period of hyperinflation in 1991. Prices rose 6.6 percent in the month, ahead of forecasts, forcing the central bank's hand.
The bank had held the interest rate steady since its last hike in September, when it increased the 28-day Leliq rate by 550 basis points to 75 percent, the last in a vicious tightening cycle since the start of 2022.
An official central bank statement is expected later on Thursday. It did not immediately respond to a request for comment.
Reuters reported on Wednesday that the bank had put the possibility of a rate hike back on the table after hoping to hold it steady, due to the stubbornly high inflation and fears of contagion from the global banking crisis.
"The government understands the complexities of raising the rate, but the fear lies in the flight of more pesos to the dollar and that is why it won the vote to increase," said one of the sources, a central bank adviser, asking not to be named.
"However, the decision was well discussed."
Stresses within the banking sector came to the forefront after Silicon Valley Bank's sudden collapse in the United States last week and Swiss regulators threw a liquidity lifeline to Credit Suisse amid a crisis of confidence in the lender.