Argentina: Central Bank lowers interest rate floor again at March’s meeting
On 5 March, in a further bid to prompt an economic recovery and amid some moderation in inflationary pressures, the Central Bank of Argentina (BCRA) decided to reduce the lower floor for the LELIQ rate to 38.0%. On 19 February, the Central Bank had set a new lower floor for the LELIQ rate, at 40.0%, opting to cut the rate by four percentage points. 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 eight so far.
Looking ahead, it remains uncertain whether the cuts will support the economy or whether they will simply fuel inflation. Lower interest rates and an expanding monetary base could translate into higher liquidity, putting pressure on the peso and stoking price pressures.