The Central Bank of Argentina reduced the interest rate to 50 percent

The Central Bank of Argentina reduced the interest rate to 50 percent

The Central Bank of Argentina (BCRA) reduced interest rates for the third time in 3 weeks. The bank reduced the policy rate by 1000 basis points to 50 percent. The decision pointed out that there has been a significant slowdown in inflation in recent months.

In the statement made by the bank, it was stated that it was decided to reduce the policy interest rate.

It was stated in the statement that the interest rate was reduced from 60 percent to 50 percent, and that the decision in question was based on the rapid adjustment in inflation expectations, the strengthening of the fiscal anchor and the contractionary monetary effect caused by the seasonality in the Treasury’s external payments in this quarter.

In Argentina, where annual inflation is 288 percent, the Central Bank’s third interest rate cut in three weeks surprised the markets.

Since Argentine President Javier Milei took office in December 2023, a significant change has been made in monetary policy and the Central Bank has reduced interest rates 5 times.

After taking office, the Milei administration lifted price controls, announced that it would devalue the Argentine peso by more than 50 percent against the dollar and that public expenditures would be cut.