BUENOS AIRES (Dow Jones)–The Central Bank of Argentina said late Thursday that it met its monetary program goals for 2011.
The bank said its benchmark M2 measure of money supply expanded by 29%, which is just over one percentage point higher than the 27.9% target initially set by the bank.
«In 2011 we also achieved other objectives set out in the monetary program relating to an increase in the monetization of the economy and the broadening of credit,» the monetary authority said.
Peso-denominated loans grew 49.2% last year, according to the bank, constituting the biggest increase in lending in recent years. Meanwhile, credit offered to the private sector either in pesos or in foreign currency rose 2.2 percentage points to amount to 13.9% of gross domestic product.
The bank said it provided 4.115 billion pesos ($954 million) in loans through its bicentennial lending program aimed at increasing investment in production capacity, which Central Bank President Mercedes Marco del Pont says is crucial to fighting inflation.
Marco del Pont has harshly criticized traditional approaches to controlling inflation, which private-sector economists say surpasses 20% annually. She has said repeatedly that production constraints and manufacturing bottlenecks are much more responsible for inflation than monetary policy.
In a recent report summarizing its 2012 monetary program, the central bank said GDP will likely expand between 4.5% and 7.5%. That is slightly higher than the 5.1% growth forecast in the government’s 2012 budget.
Argentina faces a less favorable economic backdrop going into 2012 amid sluggish demand for its industrial exports to Brazil and a slowdown in global economic activity in general.
The country’s trade surplus will likely fall to $8.9 billion next year, the central bank said.
Annual inflation as measured by the national statistics agency’s heavily questioned consumer price index will likely slow to 9.2% next year, the central bank said in its report for 2012.
Indec, as the agency is known, said its CPI was up 9.5% on the year at the end of November.
Most private-sector economists say lax fiscal and monetary policy, a booming economy and a growing money supply are fueling inflation.
A 25% increase in the minimum wage earlier this year and 12-month inflation expectations that are firmly anchored at 25% suggest inflation is higher than what official data indicate.
The central bank said it is targeting a 26.4% increase in its benchmark M2 measure of money supply next year.
-By Taos Turner, Dow Jones Newswires; 5411-4103-6728; taos.turner@dowjones.com
Source: online.wsj.com