The Central Bank's decision reflects a broader strategy to manage inflation and stabilize the economy under President Milei's administration.
The reduction in interest rates is expected to influence consumer behavior, potentially leading to increased spending as borrowing costs decrease.
The narrowing gap between the official and parallel exchange rates indicates a strengthening of the peso and may encourage more investments in local currency.
If inflation continues to decrease as projected, further rate cuts may follow in 2025, potentially leading to a more stable economic environment.
The expected inflation rate of 27-28% for 2025 could influence consumer confidence and spending patterns in Argentina.
Continued reductions in interest rates could stimulate economic growth, but may also pose risks if inflation does not stabilize as anticipated.
The Central Bank of Argentina has lowered its benchmark interest rate from 35% to 32%, effective December 6, 2024. This marks the eighth consecutive rate cut since President Javier Milei took office, with the rate previously standing at 126%. The decision is based on expectations of lower inflation, with November's inflation projected at 2.8% and December's at 2.9%. Consequently, fixed-term deposits are expected to yield lower returns, aligning closely with anticipated inflation rates. The parallel exchange rate has also seen a decrease, now at 1,055 pesos, narrowing the gap with the official rate.
