Central Bank President (second from right) at yesterday's press conference. (Télam / José Fernández)

While expressing optimism that the inflation rate will decrease from May onward, Central Bank Governor Federico Sturzenegger has indicated that if the rate stays high, interest rates will be going back up in order to meet the 15 percent target for set for this year.

Speaking today, days after the inflation rate for March was confirmed and the cumulative inflation rate for the first quarter of 2018 clocked in at 6.7 percent, the central banker said that the situation was transitory.

Consumer prices increased by 2.3 percent in March, bringing the inflation rate in 2018 so far to a cumulative 6.7 percent. The Central Bank has set an inflation target of 15 percent for 2018. The rate was 2.4 percent in February and 1.8 percent in January. Compared to a year ago, prices have increased by an average 25.4 percent around the country.

“Our scenario is an annual inflation rate of 15 percent. If that scenario isn’t met we have to what we have to do, which in this case is to increase the interest rate” said Sturzenegger at a press conference today.

One of the reasons pointed to for the higher than expected inflation rate was a “shock” in the regulated prices in December 2017 and the first quarter of 2018. According to the Central Bank, those increases affected not only the general inflation rate but also core inflation, an important indicator of the overall trends determining inflation.

By the same token, the Central Bank authorities expressed enthusiasm that the projected price increases that are yet to kick in for 2018 are comparatively lower than in 2017 and 2016.

The Central Bank last cut benchmark interest rates in January of this year, leaving them at 27.25 percent after two cuts in quick succession. The adjustments were on the cards since the government adjusted its inflation targets for the coming years in late December 2018.

The revised annual inflation targets were set at 15 percent for 2018, 10 percent for 2019 and, finally, 5 percent for 2020. These targets are a little higher than the ones originally set at the beginning of the Mauricio Macri administration, and were announced after the previous ones had proven unattainable.