The Central Bank of the Argentine Republic (BCRA) has announced a new phase in its monetary program, set to begin in January 2026. The goal is to bring domestic inflation rates closer to international levels and strengthen price stability.
The central bank stated that it will focus on ensuring that money supply matches the recovery in demand for money, mainly by increasing international reserves. According to the BCRA, “the successful progress in resolving macroeconomic imbalances and the validation of the strength of the economic program amid political uncertainty from midterm elections expand planning horizons, creating favorable conditions for growth, re-monetization of the economy, and accumulation of international reserves.”
Starting January 1, 2026, both the ceiling and floor of Argentina’s currency band will adjust monthly based on the latest inflation data reported by INDEC. The BCRA also plans to launch a reserve accumulation program aligned with market liquidity and evolving demand for money. Under its baseline scenario, the central bank projects an increase in monetary base from 4.2% to 4.8% of GDP by December 2026, potentially funded by purchasing up to USD 10 billion—subject to balance-of-payments flows. If demand for money rises further by 1% of GDP, reserve purchases could reach USD 17 billion without requiring sustained sterilization efforts.
Daily reserve purchases will correspond to about 5% of daily foreign exchange market volume. The BCRA may conduct block purchases if necessary to avoid disrupting market stability.
The statement outlined recent progress in Argentina’s fiscal and monetary policy since late 2023. These measures included eliminating excess money issuance linked to past controls on prices and capital flows, removing interest rate distortions, lifting foreign exchange restrictions (“cepo”), developing an interbank liquidity market despite ongoing tax-related distortions, normalizing payment of private commercial debt related to imports, cleaning up the central bank’s balance sheet by reducing holdings of public securities by over 65%, and eliminating remunerated liabilities.
These steps contributed to a sharp drop in annual inflation—from nearly 290% in April 2024 down to 31.4% in November 2025—and anchored expectations for continued disinflation. At the same time, real monetary aggregates increased significantly: between April 2024 and November 2025, monetary base rose from 2.7% to 4.2% of GDP; M3 increased from 14.5% to 16.7%; and peso-denominated private sector credit expanded from 4.2% to 9%.
A period of political instability beginning in April 2025 caused a temporary collapse in money demand as Argentines sought dollar assets as a hedge against uncertainty. With election-related turbulence now resolved, conditions have improved for further economic growth and reserve accumulation.
Looking ahead, BCRA expects that Argentina’s monetary aggregates could return toward historical norms—between 8–9% of GDP—without fueling inflationary pressures if supported by continued access to international capital markets for sovereign refinancing needs.
Other key elements for next year include maintaining a floating exchange rate regime within bands tied each month to domestic inflation data (rather than U.S. inflation), resuming quarterly publication of its Monetary Policy Report starting December 2025 for greater transparency, continuing gradual normalization of bank reserve requirements (“encajes”), using open-market operations (primarily LECAPs), repos with financial institutions at rates set by BCRA referencing secondary market yields on short-term instruments, and coordinating closely with the Ministry of Economy so government financing does not disrupt overall liquidity management.
The BCRA stated: “The central bank anticipates a cycle of expansion in economic activity and private sector credit driven by market incentives favoring investment, exports, and consumption.” It added that free from remunerated liabilities stockpiles (“pasivos remunerados”), it will meet rising demand for money through its planned reserve purchases while keeping monetary policy tight enough so that supply grows more slowly than demand.
