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Argentina's central bank ups rate floor to 78%, sets lower level for October

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Argentina's central bank ups rate floor to 78%, sets lower level for October

Argentina's central bank raised the floor for its benchmark interest rate to 78% for the rest of September, up from 58% previously, in an effort to safeguard monetary and financial stability in the recession-hit economy.

Banco Central de la República Argentina also set a rate floor of 68% for October, according to a statement.

Argentina's benchmark rate has been the highest in the world for more than a year with the government struggling to contain sky-high inflation and strong currency devaluation. The rate, which is set daily via short-term debt auctions, stood at 84.14% on Sept. 13 and 83% on Sept. 18.

The central bank said it currently sees Argentina's monetary base expanding 2.5% per month in September and October, but added that the projected expansion will be adjusted based on its interventions in the currency market.

"The monetary policy committee considers these measures will allow for real positive interest rates to be sustained and to resume the deflation process starting in October," the bank said.

Argentine markets have experienced considerable volatility following President Mauricio Macri's defeat in an August primary election. Loan disbursements from the International Monetary Fund, under a record $57 billion funding arrangement, are in doubt as the IMF reportedly waits on the results of presidential elections due in October.

In response to the central bank's latest monetary policy announcement, the IMF said it hopes to engage in dialogue with Argentine authorities "in the coming weeks" on a range of issues, La Nación reported.

"The IMF staff remains engaged with Argentina and continue to work with the authorities to address the challenging situation that Argentina faces," the fund said.