In order to consolidate price stability, the Central Bank of the Argentine Republic (BCRA) announces the start of a new phase of the monetary program. The monetary authority’s efforts will prioritize the objective of achieving the convergence of domestic inflation to the level of international inflation.
Successful progress in resolving macroeconomic imbalances and validating the strength of the economic program in the face of the political uncertainty caused by the mid-term elections broaden the planning horizon, creating favorable conditions for growth, the re-monetization of the economy, and the accumulation of international reserves.
The management of monetary policy will be aimed at ensuring that the money supply accompanies the recovery of the demand for money, prioritizing its supply through the accumulation of international reserves. Monetary programming will define a consistent trajectory for monetary aggregates that will make the disinflation process compatible with the accumulation of international reserves.
Summary of the main measures adopted, which will be developed in detail in the following sections:
– As of January 1, 2026, the ceiling and floor of the floating exchange rate band will evolve each month at the rate corresponding to the latest monthly inflation data reported by INDEC (T-2).
– As of January 1, 2026, the BCRA will initiate a program for the accumulation of international reserves consistent with the evolution of the demand for money and the liquidity of the foreign exchange market. The BCRA’s base scenario of re-monetization foresees an increase in the monetary base from the current 4.2% to 4.8% of GDP by December 2026, which could be supplied through the purchase of USD10 billion subject to the supply of balance-of-payments flows.
– An additional increase in the demand for money of 1% of GDP could bring purchases to USD 17,000 million, subject to the supply of balance-of-payments flows, without requiring sustained sterilization efforts.
– The daily execution amount of the reserve accumulation program will be aligned with a 5% share of the daily volume of the foreign exchange market. The BCRA will be able to make block purchases that could otherwise affect the proper functioning and stability of the market.
Context, Recent Developments and Background of the Monetary Program
Macroeconomic stabilization was consolidated in 2024 based on fiscal discipline, the end of monetary financing to the Treasury, and the elimination of endogenous issuance associated with interest-bearing liabilities.
Since December 2023, the BCRA adopted a monetary framework based on the control of monetary aggregates and the simplification of the interest rate scheme, eliminating the LELIQ and initially using the overnight pass rate as the only reference. After the initial opening of the exchange rate, the exchange rate slippage scheme of 2% per month functioned as a nominal anchor in the first stage of the program. The freezing of the broad monetary base complemented these measures, helping to anchor inflationary expectations.
During the last two years, the economic program has made progress in:
(i) the elimination of surplus monetary issuance, manifested by monetary backwardness, price controls, and capital controls;
(ii) the reduction of restrictions associated with price and interest rate controls that distorted the efficient allocation of resources;
(iii) the lifting of the clamps and the normalization of access to the foreign exchange market with the consequent positive impact on the formation of price and inflation expectations;
(iv) the development of the interbank liquidity market (even though serious distortions associated with current provincial taxes persist);
(v) the normalization of the payment of private commercial debt linked to imports and the elimination of monetary issuance contingencies (puts);
(vi) the clean-up of the BCRA’s balance sheet, reducing by more than 65% the proportion of public securities in the BCRA’s assets in relation to gross reserves, and the elimination of interest-bearing liabilities.
These advances in fiscal and monetary policy made it possible to establish a turning point and promote the reduction of inflation. In April 2024, inflation had reached a peak of close to 290% per year, reflecting elements indicative of a hyperinflationary path. In November 2025, annual inflation was 31.4%. More importantly, inflation expectations remain firmly anchored, anticipating a path of continued disinflation forward, as reflected in the latest REM of November 2025.
The collapse of inflation in the last 18 months was compatible with the observed increase in the demand for money. This increase in the demand for money allowed for a marked increase in real terms of monetary aggregates. Between April 2024 and November 2025, the monetary base increased from 2.7% to 4.2% of GDP, while M3 increased from 14.5% to 16.7% of GDP in the same period. At the same time, bank credit in pesos to the private sector expanded from 4.2% to 9.0% of GDP, supported by the release of financial resources allowed by the fiscal balance sustained over 23 months.
The political instability that began in April 2025 temporarily interrupted this process, reflecting in a collapse in the demand for money. This shock led to an episode of unprecedented dollarization of portfolios and exchange rate hedging.
With the period of electoral uncertainty successfully overcome, the conditions are present to advance in a new phase of the monetary program. This stage faces favorable conditions for growth, the re-monetization of the economy, and the accumulation of international reserves.
Compared to historical parameters, in the coming years monetary aggregates could resume a path of marked growth in real terms without generating inflationary pressures. Historically, the monetization of the Argentine economy (represented by the monetary base) ranged between 8 and 9% of GDP.
The recovery of access to the international capital market by the National Treasury to refinance its maturities in foreign currency will allow reserve purchases to accumulate on the BCRA’s balance sheet instead of being used for debt cancellation.
Monetary Program 2026
Floating regime between bands: as of January 1, 2026, the ceiling and floor of the floating exchange rate band will evolve each month at the rate corresponding to the latest monthly inflation data reported by INDEC (T-2).
Since the rate of band slippage is not adjusted for U.S. inflation, the ceiling of the band increases in real terms over time. The floating exchange rate bands will continue to serve the function of limiting the risk of extreme and abrupt movements in the exchange rate.
Pre-announced reserve purchase program: as of January 1, 2026, the BCRA will initiate an international reserve accumulation program consisting of two considerations:
(i) The demand for money: the program designed is consistent with the BCRA’s estimate for the growth and re-monetization of the economy throughout 2026. The BCRA’s base scenario of re-monetization foresees an increase in the monetary base from the current 4.2% to 4.8% of GDP by December 2026, which could be supplied through the purchase of USD10 billion subject to the supply of balance-of-payments flows. An additional increase in the demand for money of 1% of GDP could bring purchases to USD 17,000 million, subject to the supply of flows from the balance of payments, without generating inflationary pressures.
The BCRA will maintain a bias in its monetary policy that avoids sustained sterilization efforts as long as the demand for money evolves as expected. In the event that the evolution of the demand for money is lower than expected, the BCRA will adopt the corrective measures it deems pertinent in line with the economic program.
(ii) The liquidity of the foreign exchange market: in order to promote the continuity of the proper functioning and stability of the foreign exchange market, the reserve purchase program will be compatible with the daily liquidity of the foreign exchange market. Initially, the daily execution amount will be aligned with a 5% share of the daily volume of the foreign exchange market. This operational flexibility responds to the observation that the volume traded daily on the foreign exchange market presents very significant fluctuations. As an example, in recent weeks the volume has dropped by a third, from averaging $600 million a day to around $200 million (net of pass trades). In addition to operations in the MLC, the BCRA may make block purchases that could otherwise affect the proper functioning and stability of the market.
Strengthening communication: the BCRA will resume the publication of its quarterly monetary policy report, starting with the one corresponding to December 2025. This quarterly publication will aim to share the BCRA’s analysis of the national and international economic situation, evaluate inflationary dynamics and their prospects, and transparently explain monetary policy decisions.
Normalization of the bank reserve policy: the BCRA will continue to move forward with the process of gradual normalization of the reserve requirement policy. The impact of the modifications to the integration requirements will be a relevant factor in determining the monetary equilibrium and will therefore be carried out in a manner consistent with price stability and with the recovery of financial intermediation.
Operational implementation aspects of the 2026 monetary program
The calibration of monetary policy in the framework described will be carried out according to the evolution of inflation, its relationship with the level of activity and the financial conditions that determine the demand for money. As long as observed inflation remains above international inflation, the BCRA will maintain a contractionary monetary bias with respect to its estimate of the base path of money demand.
To manage the amount of money derived from the reserve purchase program, the BCRA will continue to use conventional and prudential tools. Priority will be given to correcting possible deviations in the monetary balance through:
(i) Open market operations mainly through purchases and sales of LECAPs in pesos).
(ii) Transactions with a commitment to repurchase LECAPs (repos) with financial institutions.
If necessary, and in a complementary manner, the reserve requirements may be recalibrated for the same purposes, ensuring that changes in the level of integration converge to prudential parameters.
Passive repo operations with financial institutions will be agreed daily at the interest rate defined by the BCRA, taking as a reference the levels observed in the secondary LECAP market.
In a context of financial stability, the balances associated with operational liquidity will receive an interest rate that encourages institutions to prioritize the placement of their surplus financial balances in instruments with maturities longer than one day and at positive real rates.
Repo operations with the BCRA will be agreed within market operating hours and not automatically, a modality known as the “sweeping” of entity balances.
The active pass window will remain in effect with the restrictions that currently apply in terms of the amount and term available. The interest rate on active pass operations will be set by the BCRA by applying a premium on the rate observed in the secondary market of short-term LECAPs.
Recognizing the monetary impact of the Treasury’s financial programming, coordination will continue with the Ministry of Economy on the management of Treasury instruments and financial programming, so that it does not alter the BCRA’s monetary programming aimed at preserving the balance of domestic liquidity.
The BCRA anticipates a cycle of expansion in economic activity and credit to the private sector, driven by market incentives that favor investment, exports and consumption. Free of stocks of interest-bearing liabilities, the BCRA will supply the demand for money through its international reserve purchase program. In order to continue reducing inflation, the BCRA will maintain a contractionary bias in monetary policy, ensuring that the money supply evolves at a slower pace than demand.
