Argentina Revised Up Inflation Target to 15 Percent in 2018

Argentina has adjusted their inflation target for the next two years, which enables the central bank to ease their monetary policies to boost economic recovery following a decline of peso for almost two years.

The inflation target was revised up to 15 percent in 2018 from the former range of 8 to 12 percent, according to the statement of Treasury Minister Nicolas Dujovne on Thursday. In later year, the government also adjusted their inflation target to 10 percent in 2019 and 5 percent the year after.

The decision to adjust the target rate came after President Mauricio Macri failed to achieve the 12 to 17 percent target despite tighter plans, which also starts to have an impact on the economic growth.  There has been discord between the central bank chief Federico Sturzenegger and other members of Macri’s economic team in his two-year office, as they try to lower rates to improve the economy from recession.  

Sturzenegger said at the conference that a “gradual” plans of growth will make way for monetary policy easing. He also measured following the changes that the country could reach 10 percent by the end of next year.

The chief of the central bank has mentioned previously that a feasible growth can be achieved by curbing inflation. Price increased at a much quicker pace in the first months of the year because the bank was eager to bring down the benchmark in the previous year. The central bank chief increased the borrowing costs to 400 bp to 28.75 while the inflation is anticipated to slow down to 16.6 percent by the end of 2018, based on the monthly polls of the central bank.