Oct. 1 (Bloomberg) -- Argentina's central bank doubled its repurchase agreements and cut their interest rates by a quarter point today in an effort to boost liquidity and lower borrowing costs in South America's second-largest economy.

The central bank lowered rates today on 7, 14, and 30-day repurchase agreements to 10.25 percent, 10.5 percent and 10.75 percent, respectively, the bank said in a statement first released Sept. 27. The bank also doubled the supply of those agreements to 2 billion pesos ($635 million).

``These measures are part of the battery of tools undertaken by the central bank to avoid excessive fluctuations in interest rates, which aren't responding to the liquidity in the financial system but to precautionary attitudes deriving from uncertainty caused by the subprime crisis in the U.S.,'' the statement said.

Tightening credit threatens to slow almost five years of economic growth under President Nestor Kirchner. His wife, Senator Cristina Fernandez de Kirchner, is the leading candidate in the country's Oct. 28 presidential election.

Argentina's banks ``need to understand'' that loans should be available to whoever needs them, Cabinet Chief Alberto Fernandez said, according to the Buenos Aires daily Clarin. The cabinet chief said that the issue was of ``great concern'' to Senator Fernandez, Clarin reported.

In repos, the central bank buys securities from Argentine banks, temporarily raising the amount of money available in the banking system. At maturity, the securities are returned, and the cash is returned to the central bank.

To contact the reporter on this story: Bill Faries in Buenos Aires at wfaries@bloomberg.net

Last Updated: October 1, 2007 13:57 EDT