Argentina: Central Bank holds interest rate floor steady at November meeting
On 29 November, the Central Bank of Argentina (BCRA) decided to hold the temporary lower floor for the LELIQ rate steady at 63.0% in order to continue to support its currency. On 30 October, the Central Bank had set a new temporary lower floor for the LELIQ rate, at 63.0% for November, having sat at 68.0% for October, in order to protect the Argentine peso.
The Bank also reiterated it will allow the monetary base to increase in the December-January period, in order to cope with increased demand for money stemming from seasonal factors related to sales in the holiday period and end-of-year bonuses.
Going forward, it remains to be seen if the current measures, together with the Bank’s repeated interventions in the FX market, will help sustain demand for peso-denominated assets and thus contain capital flight.