General guidelines
The first objective of the Central Bank of the Argentine Republic (BCRA) is to ensure monetary stability, that is, to achieve a low and stable level of inflation. Through this objective, it is possible to improve the degree of predictability of the economy, facilitating the decision-making process of investment, production and hiring, which stimulates the generation of employment and long-term economic growth.
It also allows financial institutions (EFIs) to better assess their risks, promoting greater financial stability. At the same time, low inflation reduces the inflationary tax, allowing families with lower purchasing power to preserve the value of their income and savings, contributing to the path towards economic development with social equity.
With this objective in mind, it was considered appropriate to implement an inflation targeting scheme, establishing a path of inflation targets of between 12% and 17% for 2017, 15% for 2018, 10% for 2019 and finally 5% for 20201. Although during 2017 the BCRA made efforts to reduce inflation and some progress was made (inflation fell 11.8 percentage points compared to 2016, although it was above the target), subsequent events showed that Argentina was not yet ready for a regime of this style and that a stronger nominal anchor was required. Since the beginning of the implementation of the inflation targeting scheme, the required adjustments in the rates of public services have had a higher impact on inflation than expected. In addition, the sudden change in international financial conditions made it clear that the path of fiscal and monetary corrections required greater consistency.
It is also an objective of the BCRA to maintain the stability of the financial system and promote its growth. Development with social equity requires a financial system deep enough to make it possible to channel savings into investment and the provision of resources for anyone who owns a productive project, thus promoting greater equality of opportunities. In this regard, during 2017 measures continued to be
taken to stimulate savings in national currency, facilitate access to credit and increase the scope and efficiency of the financial system.
Finally, the BCRA promotes banking penetration and facilitates the function of electronic money as a means of payment. Greater equity in the access and use of financial services allows transactions to be
more agile and secure. It also contributes to economic development because it hinders organized crime and money laundering, while promoting the formalization of the economy, generating
greater equity in the distribution of tax burdens in society.
Having presented the main objectives of the BCRA, the main measures taken and the results obtained during 2017 are detailed.
