Amidst economic fluctuations, Argentina’s Central Bank (BCRA) has once again adjusted its basic interest rates, aiming to navigate the country’s financial landscape. This recent shift, announced on December 6th, 2024, signals a reduction in the Nominal Annual Rate (TNA) from 35% to 32%, with a corresponding decline in swap rates from 40% to 36%. These changes, effective immediately, will impact fixed-term deposits across the board.
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Reasons for the rate adjustment:
- The decision to lower interest rates comes as a response to subdued inflation expectations observed in recent months. Forecasts for the Consumer Price Index (CPI) in November were notably below previous figures, reflecting a trend of stable inflation rates.
- Notable economists, contributing to the BCRA’s Market Expectations Outlook (REM), have emphasized the importance of aligning interest rates with prevailing market conditions and macroeconomic projections.
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Impact on financial institutions:
- Active deposits’ interest rates have been reduced from 40% to 36%, enabling banks to access short-term liquidity more affordably. This adjustment facilitates the provision of loans to customers and supports overall financial operations within the banking sector.
- Economic projections:
- The forthcoming release of the inflation index by Argentina’s National Institute of Statistics and Census (Indec) is anticipated to reflect a moderate inflation rate in the previous month.
- Projections from the REM suggest a gradual increase in inflation over the coming months, reaching a cumulative rate of 118.8% by the end of 2024. Forecasts for 2025 and beyond hint at a consistent inflation rate, with expectations for the annual figure to stabilize at around 27-28% by 2026.
As the economic landscape continues to evolve, the BCRA’s decision to adjust interest rates reflects a strategic approach to navigating the challenges posed by inflation. By aligning financial policies with market expectations, the Central Bank aims to ensure stability and sustainability in Argentina’s economic outlook. Stay tuned for further updates on economic indicators and policy adjustments as the country moves towards a more balanced financial future.
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