MercoPress. South Atlantic News Agency

Argentina's BCRA lowers basic interest rate again

The previous decrease had been announced on Nov. 1 when the TNA was lowered from 40 to 35%

Argentina's Central Bank (BCRA) announced Thursday a reduction in the basic interest rate (Nominal Annual Rate - TNA), from 35% to 32% while one for swaps will go down from 40% to 36%. The measure is effective as of Friday and impacts all fixed-term deposits.

The initiative stems from the low inflation expectations observed in the last months after the expectations of banks and private consulting firms regarding November's Consumer Price Index (CPI) were below 3%, similar to October's 2.7%, it was explained. Leading economists contributing to the latest issue of the BCRA's Market Expectations Outlook (Relevamiento de Expectativas de Mercado - REM) concurred.

The BCRA highlighted that these rates seek to accompany the financial market and macroeconomic projections while monitoring the main price indicators. The previous decrease had been announced on Nov. 1 when the TNA was lowered from 40 to 35%

In addition, the Central Bank cut down the interest rate of active deposits from 40 to 36%. This is the instrument that banks can use to access short-term liquidity and obtain pesos to finance other operations, among others, the delivery of loans to their customers.

Argentina's National Institute of Statistics and Census (Indec) is to announce last month's inflation index next week.

The REM predicted it to stand at 2.8% and around 2.9% in December for a total of 118.8% by the end of 2024. Meanwhile, a 2% inflation rate is forecast for May 2025, and an annual inflation rate of between 27 and 28%, reaching 15% in 2026.

Among other projections, the official exchange rate for 2025 could be around AR$ 1,230 / US$ 1, below the expected inflation.