Argentina applies new monetary policy scheme
The South American country launched on October 1st a new monetary scheme through its Central Bank, which seeks to reduce inflation and recover the economy
Through an official document the Central Bank of the Argentine Republic (BCRA), it was known that a new monetary policy scheme has been operational since Monday, October 1st. The objective of this strategy is to reduce inflation and recover the national economy.
The main commitment of the BCRA is not to increase the level of the monetary base until June 2019. The immediate consequence is a marked monetary contraction in the coming months.
Among the necessary steps for a successful strategy is to adjust the monetary base with the seasonality of December and June, period during which the demand for money rises.
On the other hand, the Argentine banking entity will have to adjust the daily operations of Liquidity Letters (Leliq) with the banks, which are defined by the supply and demand of liquidity.
The BCRA will establish intervention and non-intervention exchange areas, in addition to the free float of the Argentine peso. From the entity point out: “The new monetary policy is consistent with goals of primary fiscal balance for 2019 and surplus in 2020. As already announced, the BCRA will not make more transfers to the Treasury, which reinforces the commitment to a decreasing inflation as over time.”
M.Pino
Source: Finanzas Digital
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