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Argentine elections will drive monetary expansion

Wednesday, March 4, 2015

Subject

The Central Bank's 2015 monetary programme.

Significance

The Central Bank's (BCRA) 2015 monetary programme indicates that the main features of the current monetary policy framework -- characterised by an expansionary bias, foreign exchange controls and close monitoring of the informal exchange market -- will continue this year.

Impacts

  • The government will prioritise exchange rate stability, at the expense of economic activity.
  • The BCRA will continue using the official exchange rate as a nominal anchor.
  • Foreign exchange controls may be extended to discourage devaluation expectations and to protect international reserves.
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