BUENOS AIRES: Argentina's central bank will use a two-month average, rather than monthly, to reduce the volatility of reserve requirement calculations under its $57 billion loan from the International Monetary Fund.
The bank, which made the announcement on Monday, must soak up a certain amount of excess liquidity each month through the issuance of short-term bonds.
The adjustment means that rather than reporting the reserve balance for July, the bank will use a two-month average, taking in July and August.
"To avoid a situation in which policy contracts excessively in July and expands in August, the Monetary Policy Committee has decided to use the bimonthly average to determine compliance with the (monetary base) target in this period," the bank said in a statement.
The central bank also said it will maintain the minimum rate of 58% for short-term peso denominated notes known as "Leliqs" until the next inflation figures.
"The IMF supports the Central Bank of Argentina's technical adjustments to its monetary framework announced today.
These changes will ensure that monetary policy will remain geared towards ensuring a continued path of declining inflation and a smooth functioning of the financial system," IMF spokesman Gerry Rice said on Twitter on Monday.
After President Mauricio Macri negotiated the biggest loan in IMF history last year amid rampant inflation and a run on the peso currency, he introduced austerity measures which included unpopular spending cuts to reach the agreed fiscal targets.
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