UPDATE 1-More money, managed float: Argentina central bank draws policy guidelines

(Recasts with policy guidelines, goals on monetary supply. Adds central bank statement, goals on inflation, background)

BUENOS AIRES, Jan 27 (Reuters) - Argentina’s central bank released policy guidelines on Monday aimed at increasing the monetary supply and avoiding major exchange rate fluctuations as the new administration of Alberto Fernandez seeks to curb a pervasive economic crisis in Latin America’s No. 3 economy.

The bank said in a statement that it supported a managed exchange rate float to avoid sharp fluctuations in the value of the currency. The monetary policy should promote a “prudent expansion” of the monetary supply, the bank said.

Argentina is grappling with about $100 billion in sovereign debt the government must restructure with its creditors. Economy Minister Martin Guzman is in New York to meet with officials from the International Monetary Fund, which has a $57 billion financing package with Argentina.

If needed, the bank said it will assist the Treasury regarding external debt payments, as the country grapples with a looming debt crunch.

If “exceptionally necessary,” the central bank will assist with debt payments in local currency, it said in a statement. The central bank said it expects to reduce inflation in 2020; inflation in 2019 was 53.8%.

The bank seeks to “induce a gradual but sustainable reduction of the inflation rate based on a prudent monetary policy approach, consistent and coordinated with the rest of the government’s economic policy and national income policy,” the statement said.

The bank also said it would prevent interest rates from falling into negative real levels.

The bank’s statement criticized the former administration of Mauricio Macri for lifting the currency controls imposed by the previous government, calling the decision an “error.”

Amid a steep drop in financial markets and the peso currency, Macri had imposed currency controls toward the end of his term which the bank called “essential to mitigate the crisis.” (Reporting by Cassandra Garrison, Rodrigo Campos and Hernan Nessi; Editing by Leslie Adler)