Argentina inflation rate will slow to about 34 percent this year: OECD

FILE PHOTO: A trash collector is reflected in an electronic board in Buenos Aires' financial district, Argentina, March 26, 2019. REUTERS/Agustin Marcarian/File Photo

BUENOS AIRES (Reuters) - The Organization for Economic Cooperation and Development (OECD) estimates that Argentina’s inflation rate will slow to about 34 percent in 2019, an agency official said in Buenos Aires on Wednesday.

The OECD’s prediction was higher than the most recent central bank poll of economists, who predicted 2019 inflation of 31.9 percent.

Argentina, the third-largest economy in the region, recorded inflation of nearly 48 percent in 2018 as a result of a sharp devaluation of its peso currency <ARS = RASL>.

The central bank imposed a restriction of zero growth in the monetary base last year. Alvaro Santos Pereira of the OECD told a news conference on Wednesday that the policy will result in the deceleration of inflation.

Argentina’s central bank has signaled a more hawkish stance over the last month, looking to tighten monetary policy in order to tame inflation and protect the peso, which analysts said should limit the recent weakness.

The OECD also estimated that Argentina’s economy will begin growing again in the second half of the year, following a 2.5 percent dip in gross domestic product (GDP) in 2018. It also predicted GDP growth of 2.3 percent in 2020.

President Mauricio Macri negotiated a $56.3 billion standby financing deal with the International Monetary Fund last year. The agreement requires his government to erase its primary fiscal deficit.

Reporting by Eliana Raszewski in Buenos Aires; Writing by Cassandra Garrison; Editing by Matthew Lewis