By The Rio Times | Created at 2025-01-31 18:59:17 | Updated at 2025-01-31 22:43:28
4 hours ago
Argentina’s central bank has slashed its benchmark interest rate from 133% to 29% since President Javier Milei took office in December 2023. This marks the ninth consecutive rate cut under Milei’s administration.
It reflects a bold strategy to combat the country’s severe inflation. The aggressive monetary easing comes as inflation shows signs of cooling. Annual inflation dropped from a peak of 211.4% in 2023 to 117.8% by the end of 2024.
This significant decrease suggests Milei‘s unorthodox approach may be gaining traction. Alongside interest rate cuts, the government plans to slow the peso’s official monthly depreciation rate from 2% to 1% starting February 1st.
This move aims to further stabilize prices and boost economic confidence. However, challenges persist. Argentina maintains capital and currency controls, which Milei has pledged to lift this year.
In addition, this decision could test the resilience of his economic strategy and potentially force a reevaluation of interest rates to prevent currency instability.
The International Monetary Fund, currently negotiating a new loan program with Argentina, has traditionally advocated for higher interest rates. This stance contrasts with Milei’s current approach, highlighting the unconventional nature of his policies.
As Argentina navigates this economic experiment, the world watches closely. The success or failure of Milei’s strategy could have far-reaching implications for emerging market economies grappling with similar challenges.
