Photo: “Monedas argentinas” / Jorge Gobbi / Flickr / April 21, 2009 / CC BY 2.0

Argentina’s central bank lowered its benchmark interest rate for the 8th time since the current governor, Miguel Pesce, took over in December last year as part of Alberto Fernandez’ new government.

The Central Bank of the Argentine Republic (BCRA) cut its minimum interest rate on Leliq notes another 200 basis points to 38.0 percent, saying the effective rate was now 45.4 percent and this should be help promote savings in peso and at the same time change the composition of the credit of families and companies through a revival in credit.

BRCR has now cut its Leliq rate by a total of 25 percentage points since Dec. 19 last year and by 17 percentage points this year.

“The decision was adopted based on the signs of consolidation of the disinflationary process and wit a view to generating conditions that favor the recovery of economic activity,” BCRA said, adding the was still no firm evidence of the country’s economy exiting its recessionary phase despite early sings of an improvement in several economic indicators.

Pesce, a former vice president of BCRA, has been open about his plan to shift away from the more orthodox monetary policy stance that was applied during his predecessor Guido Sandleris.

Argentina’s inflation rate fell to 51.5 percent in January from from 52.9 percent in December, helped by a government freeze on some prices.

Despite a new government and central bank governor, Argentina’s peso has continued to set new record lows and was trading at 62.3 to the U.S. dollar today, down 3.9 percent this year.

In the central bank’s latest poll from this week, analysts lowered their forecast for inflation this year to 40 percent from 41.7 percent last month, with inflation in 2021 falling further to 30.5 percent and then 27 percent in 2022.

The economy is seen shrinking 1.2 percent this year, better than the 1.5 percent contraction seen in last months poll, with growth in 2021 of 1.7 percent and then 2.0 percent in 2022.

This article was originally published on CentralBankNews.info on March 5, 2020. It is reproduced here with permission from the author.