Monetary Policy Report (IPOM)

Institutional outlook

Following the launch of Stage 4 of the economic stabilization program and with the aim of enhancing transparency and communication of the monetary scheme, the BCRA resumed the publication of its quarterly Monetary Policy Report (IPOM). The publication adopts the standard communication practices followed by leading central banks.

In the IPOM, the BCRA shares its diagnosis of the domestic and international macroeconomic conditions, presents an assessment of its outlook, and systematically explains the monetary policy decisions adopted in order to achieve its price stability objective. The report is structured into chapters that address the macroeconomic context, price dynamics, and the conduct of monetary policy, supplemented by thematic boxes and technical annexes for a more in-depth quantitative analysis of specific topics. This approach aims at a better understanding of the interplay among the monetary policy, the formation of private sector expectations, and the general macroeconomic balance.

Unlike other stabilization experiences, the current program has delivered steady progress in correcting the main inherited macroeconomic imbalances while honoring pre‑existing contractual obligations. The achievement of fiscal balance, the elimination of monetary financing of the Treasury, the correction of relative price distortions, and the BCRA’s balance sheet cleanup have contributed to a reduction in inflation and enabled progress in the removal of foreign exchange restrictions. The consistency of the fiscal, monetary, and foreign exchange policies adopted has allowed short‑term dynamics to converge toward a balanced scenario, while the prospect of structural reforms strengthens expectations regarding its long‑term sustainability. In this context, the BCRA will continue making policy decisions aimed at fostering the efficient and prudent development of a currency competition regime.

The BCRA has adopted a monetary aggregates control regime capable of providing an anchor to the nominal evolution of the economy, relaxing restrictions in the foreign exchange and interest rate markets. This decision is aligned with similar successful stabilization experiences for developing economies. The current scheme also takes into account the specific features of an economy marked by a transition from an unstable and highly dollarized framework, in which the transmission mechanisms of interest rates, the exchange rate, and the amount of money differ from those observed in economies with lower aggregate volatility. The BCRA will continue enhancing the monetary regime, focusing its efforts on improving the operational efficiency of domestic financial markets and strengthening the transmission mechanisms of monetary policy, with the aim of fostering the development of the financial and credit system in an environment of growing nominal stability.

Within this framework, monetary policy will aim at ensuring that money supply closely accompanies the recovery of real money demand. The BCRA considers that conditions are in place to prioritize meeting the money demand through the purchase of foreign currency, thereby supporting the objective of building up international reserves. In pursuing the mandate of its Charter, the Board of the BCRA remains committed to safeguarding the value of the currency, using all the monetary policy tools available. In this regard, the Executive Branch has submitted a bill to the National Congress to amend the Charter of the BCRA. If passed, it would contribute to institutionalizing the monetary discipline adopted and to providing increasing credibility to its future monetary decisions.