Argentina: Central Bank lowers interest rate floor again at January's last meeting
January 30, 2020
On 30 January, in a bid to stimulate the economy, the Central Bank of Argentina (BCRA) decided to reduce the lower floor for the LELIQ rate to 48.0%. On 16 January, the Central Bank had set a new lower floor for the LELIQ rate, at 50.0%, also opting for a two-percentage-point cut. This brings the total number of lower-floor cuts delivered by the new BCRA’s President Miquel Ángel Pesce, who took office on 10 December, to five so far.
Going forward, it remains to be seen if recent cuts will be able to reactivate economic activity or whether they will stoke price pressures. Lower interest rates and an expanding monetary base could translate into higher liquidity, putting pressure on the peso and fueling inflation.