Money in Argentina
Argentina - Money
Central Bank introduces a floor on LELIQ rate to curb inflation
At its latest meeting held on 1 April, the Central Bank of Argentina (Banco Central de la República Argentina, BCRA) introduced a floor for the LELIQ rate during April, in order to intensify its fight against inflation. At the same time, the BCRA stated it overachieved the 0% monetary base growth target in March and that it will maintain its current stance on monetary base until the end of the year.
Higher-than-expected inflation in January and February, as well as concerns about strong price pressures in March and April, led the Central Bank to tighten its monetary policy strategy. The Bank therefore introduced a floor for the LELIQ rate during April, set at 62.5%. The BCRA consequently announced it will absorb the necessary liquidity in order to support the newly-introduced minimum rate, at the same time leaving the LELIQ rate free to move above the floor. The decision aims to drain liquidity, limit potential depreciations in the peso and thus to bring inflation down.
Starting 1 October, as stipulated in the standby agreement with the IMF, the Bank adopted a rigid monetary rule which sets a 0% monthly growth for the monetary base. As part of the agreement, the Central Bank also adopted an FX regime, which combines a free-floating range for the peso with the prevention of excessive ARS/USD fluctuations. As the Bank will continue to limit growth in the monetary base and intervene in the FX market, inflation should subsequently moderate and LELIQ interest rates will edge down. Panelists participating in the LatinFocus Consensus Forecast seeing the LELIQ rate ending 2019 at 37.33% and 2020 at 25.97%.
Argentina - Money Data
|Money (annual variation in %)||25.7||28.9||28.2||30.4||26.0|
5 years of economic forecasts for more than 30 economic indicators.
Argentina Money Chart
Source: Argentina Central Bank and FocusEconomics calculations.
|Bond Yield||6.69||0.15 %||Dec 17|
|Exchange Rate||45.13||0.45 %||May 13|
|Stock Market||32,300||2.26 %||May 13|
Get a sample report showing our regional, country and commodities data and analysis.
Request a Trial
Start working with the reports used by the world’s major financial institutions, multinational enterprises & government agencies now. Click on the button below to get started.
May 16, 2019
National consumer prices rose 3.4% over the previous month in April, coming in below March’s 4.7% month-on-month jump and ending a three-month streak of intensifying price pressures, according to the National Statistical Institute (INDEC).
May 9, 2019
Exports declined 5.0% in year-on-year terms in March, contrasting February’s 3.7% increase.
May 7, 2019
Industrial production shrank an abysmal 13.4% over the same month of last year in March, according to data released by the National Statistical Institute (INDEC) on 6 May.
May 2, 2019
The monthly indicator for economic activity (EMAE, Estimador Mensual de Actividad Económica) contracted 4.8% in annual terms in February, a softer drop than the revised 5.8% plunge recorded in January (previously reported: -5.7% year-on-year).
April 30, 2019
The Universidad Torcuato di Tella (UTDT) consumer confidence index dropped to 34.4 points in April from 34.8 points in March.