Argentina central bank leaves basic rate unchanged to combat inflation

The Central Bank confirmed its policy of supporting the Argentine Peso with occasional interventions in the money exchange market.

BUENOS AIRES – Argentina’s central bank left the basic interest rate unchanged at 27.5%, a clear signal that inflation remains the main challenge of the country’s monetary policy.

The bank also revealed that last week it intervened in the local market with 400 million dollars to keep the US dollar in the range of 20/20.50 Pesos to the greenback.

Estimates for February indicate that inflation in February will be higher than in January, mainly because of the increase in regulated prices and for some tradable goods, the bank advanced in its report.

However the acceleration is temporary and once most corrections in public service rates is completed (power, water, phones, liquid gas), and money exchange market dynamics eases, “inflation will consolidate its downward tendency”.

Likewise the pronounced depreciation of the Peso during December, and lately, continues to prevail showing some weakness.

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In this context the Central Bank will continue to intervene in support of the currency, convinced that under current conditions, a greater depreciation is not justified, neither because of real economy impacts or the course of monetary policy, and if not avoided it could have the potential of slowing down the process to take inflation to target.

Thus the “Central Bank ratifies its floating currency policy with occasional interventions, as a complement of the monetary policy, to avoid dynamic disruptions capable of altering the inflation objectives or generating negative effects for financial conditions”.–MercoPress