Argentina to Halt Monetary Base Expansion in Fight Against Inflation

Argentina will stop expanding its monetary base to combat inflation, Economy Minister Luis Caputo announced. The central bank's new policy involves stabilizing or reducing the monetary base depending on foreign exchange market operations. This move follows a recent slight rise in inflation, ending a five-month period of decline.

Argentina will cease expanding its monetary base as part of the government's campaign to combat inflation, Economy Minister Luis Caputo announced on messaging platform X on Saturday.

Caputo explained that monetary stabilization or reduction would depend on the central bank's actions in the official exchange market. "From now on the amount of money remains the same or is reduced if the central bank (BCRA) sells dollars," he wrote. If the BCRA buys dollars, the peso issuance will be counteracted with dollar sales in another specific market.

The policy will take effect on Monday, following a recent inflation uptick which interrupted a five-month period of slowing rates. Since President Javier Milei's administration began, inflation has dramatically slowed, yet June saw a slight increase to 4.6%.