Argentina to cease growing monetary base to combat rising inflation
Date
7/14/2024 5:00:37 AM
(MENAFN) Argentina has announced a significant shift in its monetary policy aimed at combating rising inflation, as Economy Minister Luis Caputo revealed on Saturday that the country will cease expanding its monetary base. In a detailed statement shared on X, formerly known as Twitter, Caputo articulated that "from now on, the amount of money will remain the same or will be reduced." This decision reflects a proactive response to recent economic indicators that showed a concerning uptick in inflation, with the consumer price index rising by 4.6 percent in June. This increase effectively ended a five-month trend of declining inflation rates, prompting the government to take decisive action.
Caputo elaborated on the implications of this policy change, indicating that the exchange rate will remain stable and will not undergo any modifications. He stressed that the total volume of pesos circulating in the economy will no longer grow; instead, it will begin to shrink. This reduction is made possible by Argentina's current fiscal surplus, which provides the government with a more favorable financial position. By limiting the expansion of the monetary base, the Argentine government aims to exert greater control over inflationary pressures that have been a persistent challenge for the nation.
The move is part of a broader strategy to stabilize the economy and foster a more sustainable financial environment. Caputo's announcement signals a commitment to addressing the root causes of inflation, and the government hopes that by implementing these measures, it can create a more predictable economic landscape for businesses and consumers alike. Overall, this policy shift represents a critical step in Argentina's ongoing efforts to navigate its economic difficulties and lay the groundwork for future growth and stability.
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