ARGENTINA: Country Recalculates Inflation Targets After Agreement With IMF

(RTTNews) - After a US$ 50 billion standby loan agreement with the International Monetary Fund (IMF), the Argentinean government reported the implementation of an economic program with a series of measures aimed at lowering inflation. With the move, new annual inflation targets were set: 17% for 2019, 13% for 2020, 9% for 2021 and 5% for 2022. Meanwhile, the inflation target for 2018 (15%) was eliminated.

"The axes of the institutional strengthening of monetary policy are the deepening of the operational and financial autonomy of the Argentinean Central Bank (BCRA), the ratification of the inflation targeting regime with a floating exchange rate, and the announcement of new inflation targets," said the monetary authority.

The BCRA considered that they are "realistic targets that at the same time forced to be very strict in matters of monetary policy". At the same time, the monetary authority "is committed to maintaining the current contractionary bias of monetary policy until it observes tangible signs that both inflation in the coming months and inflation expectations for 2019 begin to fall."

In addition, according to the statement, the program establishes the elimination of financial assistance from the BCRA to the treasury and the cancellation by the treasury of its debt with the bank of around US$ 25 billion.

"These two actions should turn the treasury into a source of monetary absorption," the entity added.