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, where it went from 45% to 40%.
“The Board of Directors of the Central Bank of the Argentine Republic (BCRA) has decided to reduce the monetary policy rate from 40% to 35% of the TNA (annual nominal rate) starting today. The BCRA also decided to reduce the interest rate on active repos from 45% to 40% of TNA”, announced the entity in a press release.
This measure comes after Argentina recorded inflation of 3.5% per month (209% year-on-year) in September. the lowest since the end of 2021 and this implied a slowdown from August’s inflation of 4.2%.
After the shock caused by the sudden devaluation of the Argentine peso ordered by the Milei executive at the start of his leadership, at the end of 2023, Inflation jumped to monthly rates of 25.5% in December and 20.6% in January.
But alongside Milei’s initial “shock” measures, prices then began a downward trend due to strong fiscal and monetary adjustment and the resulting collapse in consumption, which crushed demand .
Price moderation has become more evident since May, when the government’s zero-emission monetary policy began to bear fruit.
The relative stability of the exchange rate observed in recent months has also helped to stabilize prices in an economy very sensitive to fluctuations in the price of the US dollar on the local market.
