Argentina Monetary Policy January 2020

Argentina

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.

FocusEconomics analysts see the LELIQ rate ending 2020 at 37.84% and 2021 at 30.18%.


Author: Massimo Bassetti, Economist

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Argentina Monetary Policy Chart


Argentina Monetary Policy January 2019 1

Note: 35-day Lebac rate in %.
Source: Central Bank of the Argentine Republic (Banco Central de la República Argentina).


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