Toto Caputo defended the exchange rate band scheme: 'Go to sleep peacefully, nothing will happen to the dollar'

The Minister of Economy, Luis "Toto" Caputo, once again conveyed confidence in Javier Milei's government's economic program by reaffirming the exchange rate band system and projecting a sharp slowdown in inflation, which—according to his estimates—could fall below 1% per month by mid-2026.

"Go to sleep peacefully, nothing will happen with the dollar," the official assured in an interview with La Nación+, where he emphasized that the exchange rate scheme "provides predictability and peace of mind to people." Caputo explained that the band system "is superior to full floating," given that "Argentina still has a very fragile demand for money" and needs to avoid episodes of volatility.

"I feel comfortable with any dollar price that is within the band as it will be. I know it can't exceed the ceiling and I would prefer it not to hit the floor. If today it were much lower, it wouldn't be good for the economy," he stated. The minister elaborated on his reasoning: "If we floated, it could even work well. But that decision, adjusted for risk, isn't worth it. We are floating gradually and achieving the same effect with more peace of mind."

Caputo also emphasized that the economic course was consolidated after the elections, with an immediate change in expectations. "The economic standstill was the result of the 'kuka' risk. The elections were a spectacular boost and we will see an immediate recovery that will be reflected in the fourth quarter. Next year, Argentina could be growing at 5% or 6%," he anticipated.

Regarding inflation, Caputo acknowledged that "bringing it down from 2% is more difficult than doing so from double-digit levels," although he expressed confidence that "in the next twelve months, Argentina will converge to international inflation rates."

The minister also defended the monetary tightening prior to the legislative elections, which he described as "a kind of war policy": "We always said that after the elections it would normalize. As long as we continue on this path of fiscal and monetary orthodoxy, inflation will keep falling and that will cause rates to keep dropping," he determined.

He also announced that the Government will send the 2026 Budget Bill and the Fiscal Innocence Principle bill to Congress for consideration in extraordinary sessions.

The head of the Treasury confirmed that the Economy Ministry is working on a labor reform with measures to promote formality and reduce business costs: "We are looking at lowering employer contributions and replacing them with a severance fund, so that it doesn't cost employers more money, but they have greater certainty and less litigation," he said.

He also announced that the Ministry is considering sharply reducing personal income tax deductions, allowing deductions from a coffee maker to a mortgage loan payment. According to his explanation, "this encourages people to ask for receipts and formalizes the economy, which is what we want to achieve with labor reform."

Additionally, Caputo revealed that a new job creation regime is being studied, very advantageous for employers: "Argentina hasn't created jobs since 2011. To lower taxes, we need the country to grow. Raising taxes isn't an option. If the base grows, we all have more resources to lower taxes."

In another passage, the minister called for rationality from the opposition and pointed directly at Kirchnerism: "I would like to see a much more rational Peronism and for the alternative in 2027 not to be capitalism or communism. Kirchnerism has already had many opportunities. It can't continue to be the national alternative."

In the same vein, he praised President Javier Milei's international profile, highlighting the impact he has had on the world since his first appearance in Davos: "On the first trip to Davos I said that Javier was a global figure, an important pole of attraction. But now the admiration factor has been added. Today, businesspeople and politicians around the world feel admiration because the results support him."

Caputo also urged governors to support the Government's reforms in Congress: "If they support the reforms, we will grow strongly, and the country will collect more. The provinces benefit much more from the increase in revenue thanks to economic growth."

Finally, the minister confirmed that Argentina will seal a trade agreement with the United States: "The deal is already ready and will be announced by the U.S., which has several negotiation fronts open. It is a very beneficial agreement for both countries and, definitely, for ours."

With an optimistic tone, Caputo concluded: "Argentina has the potential to grow steadily. We return that money to the people through tax cuts, the opposite of what has been done over the past 16 years."