The Banco Central de la República Argentina announced on 2 May 2024 a cut in its monetary policy rate from 60% to 50%, alongside an adjustment to minimum reserve requirements for financial institutions. The decisions form part of an effort by Argentine authorities to reduce the outstanding stock of the central bank's remunerated liabilities.
The BCRA's remunerated liabilities consist principally of overnight passive repos (pases pasivos), which replaced Leliq notes in December 2023 as the main tool used to absorb excess liquidity from the banking system. The Milei administration, which took office in December 2023, has identified the phasing out of these instruments as an objective of its monetary programme.
RATE CUT AND RESERVE REQUIREMENTS
The central bank attributed the reduction to a significant easing in price pressures in recent months.
PHASING OUT REMUNERATED LIABILITIES
Authorities have been migrating portions of the outstanding obligations into instruments held directly by the Treasury. The reserve requirement change announced alongside the rate cut raised the reserve requirement on remunerated sight-account balances of money market mutual funds from 10% to 15%.