Argentina’s Central Bank Lowers Rate to 32% on Inflation Expectations
In a strategic move to combat inflation, Argentina’s Central Bank reduced its benchmark interest rate by 300 basis points to 32%. The decision, effective December 6, reflects improved inflation expectations, aligning with President Javier Milei’s broader economic goals.
According to the Central Bank’s Thursday announcement, the rate cut comes after its monthly survey of economists indicated a favorable trend. The survey projects monthly inflation to remain below 3% through May and anticipates annual inflation to slow to 119% by year-end.
This marks the eighth rate cut since Milei assumed office, where initial borrowing costs stood at an eye-watering 133%. Lowering interest rates has become a cornerstone of Milei’s unorthodox strategies to curb inflation and stabilize the economy.
Economic Experts Weigh In
Economist Leonardo Anzalone from Buenos Aires-based CEPEC commented,
“The Central Bank’s decision to lower the rate is predictable as it aligns with the government’s objective of reducing inflation.”
Anzalone anticipates the next step might involve decelerating the crawling peg exchange rate mechanism to anchor disinflation further.
Sebastian Menescaldi from EcoGo noted that while the Central Bank’s annualized rate currently sits at 41.88%, 12-month inflation expectations are 28.1%. EcoGo predicts the rate may settle at 30% by the year’s end.
What’s Next for Argentina’s Economy?
Argentina is set to release its November inflation data on December 11. While the Central Bank does not pre-schedule monetary policy meetings, the recent cuts reflect a cautious optimism toward sustained economic stabilization.
