“The purpose of the bank is to promote, to the extent of its powers and within the framework of the policies established by the national government, monetary stability, financial stability, employment and economic development with
social equity.”Article 3, Organic Charter of the Central Bank of the Argentine Republic.

General Guidelines

Economic activity recovered in 2021 at a faster pace than expected at the beginning of the year. This phase was possible thanks to the significant progress made in the vaccination campaign and a better prepared health infrastructure. The more favorable health context allowed the process of reopening and revitalizing the domestic economy to continue, although with heterogeneous sectoral performances. Among the components of aggregate demand, the growth of investment stood out.
In a more dynamic macroeconomic environment, retail inflation remained high during the year. In addition to a high inflationary inertia, the incidence of international prices, the observed recomposition of marketing margins in certain sectors and the readjustment of relative prices of private services in the face of the reopening of activities in a context of improvement in the epidemiological situation were added. Added to this were the greater financial volatility associated with the electoral process and the uncertainty surrounding the agreement with the IMF at the end of the year, which were reflected in expectations of higher devaluation and inflation.
In 2021, the Central Bank of the Argentine Republic was adapting monetary policy to these prevailing economic conditions. The reduction of the fiscal deficit and the process of reconstruction of the domestic debt market, which made it possible to channel a growing part of the Treasury’s needs, allowed a reduction in monetary financing to the National Treasury without affecting the process of economic growth. In this context, the BCRA carried out a credit policy focused on the most backward sectors, with a special emphasis on productive development.
In line with the objectives set by the BCRA at the beginning of the year, monetary aggregates gradually converged throughout the period to a value close to their historical average (2010-2019). The existence of a wide variety of savings instruments in pesos, which safeguarded the value of capital and ensured a positive return with respect to the evolution of prices and the exchange rate, allowed the BCRA to maintain the reference interest rates unchanged in order to accompany the process of recovery of economic activity.
As part of the managed floating strategy, throughout the first part of the year the BCRA gradually adapted the rate of depreciation to the needs of the situation, prioritizing at least partially counteracting the aforementioned inflationary pressures. In the second part of the year, however, during the pre-election period, when the private sector tends to accentuate its dollarization pattern, financial volatility increased. In response, the monetary authority recalibrated its intervention in spot and forward exchange markets, and adapted foreign exchange regulation in order to preserve exchange rate stability and promote efficient allocation of foreign exchange. After the uncertainty linked to the electoral process, the BCRA resumed an exchange rate dynamic more in line with the medium-term pillars proposed at the beginning of the administration in 2020, accelerating the pace of depreciation to gradually bring it to levels more compatible with the domestic inflation rate.
Thus, during 2021 the BCRA deployed an active monetary policy in a dynamic environment, contributing to the job-generating economic recovery and protecting household incomes, preserving monetary and financial stability.