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Argentina Monetary Policy May 2023

Argentina: Central Bank hikes in May

On 15 May, the Central Bank of Argentina (BCRA) decided to hike the LELIQ rate to 97.00% from 91.00%.

The Bank decided to deliver another drastic rate hike in an attempt to sustain the peso amid a continued selloff in the parallel market, put a lid on runaway inflation and increase the attractiveness of peso savings. The Bank’s statement reiterated that its decision was “based on the objective of seeking positive real returns on local currency investments” and that it seeks to “prevent financial volatility from acting as a driver of inflation expectations”. Argentina’s monetary policy is framed in an agreement with the IMF; the country has committed to gradually moving towards positive real interest rates.

Looking ahead, the BCRA did not give explicit guidance but stated that it would continue to monitor the evolution of the general price level, the dynamics of the foreign exchange market and monetary aggregates to calibrate its policy.

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