Argentina

The Argentina economy continues to contract, albeit at a modestly slower pace than had been expected under the program. After a brief period of falling monthly inflation, price pressures and inflation expectations are again rising. Financial conditions improved in January, with declining sovereign spreads and a rally in the local equity market, but have since then erased much of those gains, with rising volatility in both currency and interest rates in March. Nonetheless, the central government has fully rolled over its amortizing obligations over the past three months. Since the introduction of the new monetary framework in October, the central bank has maintained the growth rate of the monetary base below its targets and, in January and February, has purchased US$1 billion in FX reserves.