The Central Bank of the Argentine Republic (BCRA) decided this Friday to lower the monetary policy interest rate from 40% to 35%, the first reduction in the reference rate since the 14th. May, when it went from 45% to 40%.
“The Board of Directors of the Central Bank of the Argentine Republic (BCRA) decided to reduce the monetary policy rate from 40% to 35% of TNA (annual nominal rate) starting today. The BCRA also decided to reduce the interest rate on active repos from 45% to 40% of TNA,” the entity announced in a statement.
This measure comes after Argentina registered inflation of 3.5% monthly (209% year-on-year) in September. the lowest since the end of 2021 and that implied a slowdown compared to August inflation, which was 4.2%.
After the shock caused by the sudden devaluation of the Argentine peso ordered by the Milei Executive at the beginning of its management, at the end of 2023, Inflation jumped to monthly rates of 25.5% in December and 20.6% in January.
But hand in hand with Milei’s first ‘shock’ measures, prices then began a downward trend as a result of a strong fiscal and monetary adjustment and the consequent collapse in consumption that crushed demand.
The moderation in prices became more evident since May, when the Government’s ‘zero emission’ monetary policy began to bear fruit.
The relative exchange rate stability that has occurred in recent months has also contributed to stabilizing prices in an economy that is highly sensitive to fluctuations in the price of the US dollar in the local market.
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