Argentina’s central bank reduces policy rate to 28%

Reuters BUENOS AIRES (Reuters) — Argentina’s central bank cut its policy rate to 28 percent from 28.75 percent, two weeks after relaxing its 2018 inflation target, the bank said on Tuesday.

The bank’s first rate cut in 14 months came after a Dec. 28 news conference announcing an official inflation target for this year of 15 percent, up from the bank’s previous target range of 8 percent to 12 percent.

Argentina also has a new 2019 inflation target of 10 percent and 5 percent for 2020. “This pathway is now the objective of central bank monetary policy,” the bank said in a statement, adding it will be “cautious” in its approach to hitting the new targets.

“Naturally, if you seek a lower rate of disinflation than planned originally, the path of monetary policy will be less contractive than the one before,” the statement said.

Economist Guido Lorenzo of local consultancy ACM Consultores said Tuesday’s rate cut should have been deeper. “Going forward it will be much more difficult to cut the rate after January and February inflation data comes in,” he said.Speech

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