Decisions Taken by the Monetary Policy Council (COPOM)

Buenos Aires, April 1, 2019. The Monetary Policy Council of the BCRA (COPOM) has decided to provide further information on the development of the monetary scheme for April.

The BCRA has overcomplied with the Monetary Base (MB) target set in the COPOM release of March 14. The current target, effective until the end of the year, is set at ARS1,343 billion (net of foreign currency purchases and December's seasonal increase). The monthly average in March was ARS1,314 billion, which brings about an additional MB target contraction of ARS29 billion.

Cash in circulation, one of the MB components, remained stable in March, when it historically falls against February. Consequently, money was absorbed during the month by means of bank liquidity, the other main channel of monetary policy applied in the current scheme.

Triggered by monetary restriction, the benchmark interest rate went endogenously upwards. This shrank the high financial volatility recorded in March.

In this context of higher volatility, the BCRA intends to continue monitoring liquidity rigorously. On the grounds of predictability, the BCRA will absorb any necessary liquidity to keep a 62.5% minimum interest rate during April. That is, the benchmark interest rate will be endogenously determined above that level during this month.

The steep rise of the benchmark interest rate during March was not immediately passed on to depositors. Even though some delays are expected to occur, the BCRA will carefully monitor this dynamics.

The minimum interest rate set here completes the information on monetary policy reported in the COPOM release of March 14—the update of the non-intervention range and the potential intervention of the BCRA in the foreign exchange market during April in case the foreign exchange rate lays outside the non-intervention range.

According to high frequency data, there will be high inflation in March and April. The COPOM holds that persistence in keeping a tight control of MB development, together with the measures already announced in the COPOM release of March 14 and supplemented by today’s decision will lead to reducing inflation in the coming months.

The measures described here have been adopted with the unanimous approval of all COPOM members. The COPOM is composed of Guido Sandleris, Governor; Gustavo Cañonero, Deputy Governor; Verónica Rappoport, Alternate Deputy Governor; Enrique Szewach, member of the Board appointed by the Board of this Central Bank; and Mauro Alessandro, Economic Research Deputy General Manager.