The Central Bank of the Argentine Republic (BCRA) decided on Thursday to raise the monetary policy rate by 550 basis points, which will go from 69.5% to 75% per year, and that will impact from tomorrow on remuneration of fixed-term deposits, interest rates for loans and other financing costs in pesos. After Indec on Wednesday released the Consumer Price Index for August, which rose to 7%, the BCRA was expected to raise the interest rate again. This is the third increase in interest rates applied by the entity in the last two months, after on July 28 the Leliq rate rose 800 points, which went from 52 to 60% per year, and on August 11 a rise of 950 points was set, to reach 69.5% per year; and the ninth so far this year.
#PolíticaMonetaria | To continue the incentive to #ahorro in pesos, we raised the minimum limits of the rates on #plazofijo of human persons by establishing a floor of 75% per year for 30-day deposits up to 10 million pesos. — BCRA (@BancoCentral_AR)
September 15, 2022
The objective of the measure, as explained by the BCRA, is to normalize the structure of active and passive interest rates of the economy to bring them closer to positive territory in real terms, which helps to curb price inertia and consolidate financial stability, exchange rate and the accumulation of international reserves reached in recent weeks. ” In August, the general level inflation rate and the monthly core inflation rate were reduced compared to July, although they maintained a high level compared to the previous months. Due to this, the BCRA considers it necessary to increase once again the monetary policy rate and thus consolidate the process of normalization of the structure of active and passive interest rates of the economy to place them in a positive terrain in real terms, “explained the monetary authority in a statement. To “increase the incentive to save in pesos”, the BCRA raised the minimum limits of interest rates on the fixed terms of human persons, taking the floor from 69.5% to 75% per year for 30-day impositions up to 10 million pesos. This represents a return of 107% in annual effective terms. While for the rest of the fixed term deposits of the private sector (individuals or companies) they will have a guaranteed minimum rate of 66.5%, which represents an annual effective rate of 91%. The rate hike is part of the new monetary policy strategy set by the BCRA, which seeks to establish a policy interest rate path in order to tend towards positive real returns on investments in local currency and to preserve monetary and exchange rate stability.” At the same time, the new rates will consolidate exchange rate and financial stability and enhance the accumulation of international reserves,” explained the Central. In this sense, he explained that future rate adjustments will be closely linked to “the past and prospective evolution of the general price level and the dynamics of the exchange market.”
