In December 2024, Argentina closed the year with a inflation of 117.8%, a significantly lower figure compared to the 211.4% recorded in 2023. This result is largely due to the orthodox economic policies implemented by President Javier Milei since his inauguration 13 months ago.
Despite high inflation, the Government has achieved a notable slowdown in recent months. The Central Bank of the Argentine Republic (BCRA) has played a crucial role in this fight against inflation. In February 2025, the official exchange rate will advance to 1% per month, which represents a significant reduction compared to previous months.
This measure seeks to stabilize the currency and control inflation through a stricter monetary policy. The market has reacted positively to this news, as the Central Bank is expected to reduce the reference rate by between 3 and 5 percentage points in the coming months.
This reduction in the interest rate is seen as a necessary step to control the inflation and promote economic growth. Analysts believe that a lower interest rate will help reduce borrowing costs for businesses and consumers, which in turn will boost investment and consumption.
However, not everything is positive. The reduction in the interest rate can also have negative effects on savings and foreign investment. A lower interest rate may discourage saving, as returns on bank deposits will be lower.
Additionally, a lower interest rate may make Argentine assets less attractive to foreign investors, which could affect capital inflows into the country.. Despite these challenges, the Government remains committed to its objective of controlling inflation and stabilizing the economy.
Reduction
The reduction in the interest rate is just one of the measures that are being taken to achieve this objective. Other steps include deregulation of key sectors of the economy and implementation of stricter fiscal policies.
The inflation December and the decline in the pace of the dollar have led the Government to focus on the interest rate as a key tool to control inflation and stabilize the economy. The reduction in the interest rate is seen as a necessary step to promote economic growth, although it also presents challenges that must be carefully managed.
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