Rates unleashed, inflation tamed – and Phase 3 quietly begins
Monetary Policy
The Central Bank has officially let go of the steering wheel. In early July, the Banco Central de la República Argentina (BCRA) scrapped its benchmark interest rate and shifted to a market-determined pricing system. Rates are now floating, guided by liquidity auctions and interbank signals. That’s not just a technical tweak – it’s a regime change.
The result? Sharp volatility across the money market, with overnight rates swinging between 30% and 120%. The removal of short-term instruments like "Lefis" has added to the turbulence. But the message is clear. Argentina is handing pricing power back to the market. [Backlink to June's note on market-based rates being introduced]
At the same time, the BCRA has quietly entered Phase 3 of Milei’s monetary strategy - launching a USD 2 billion repo facility with international banks to reinforce reserves and reduce sterilisation pressure. That facility also acts as a sig...
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