Within the framework of the government transition taking place in Argentina, the Central Bank (BCRA) analyzed this Thursday the possibility of implementing a new rate increase, but finally decided not to move forward with the measure.
Within the framework of the presidential transition, the Directory of the Central Bank (BCRA) analyzed this Thursday the possibility of implementing a new increase in monetary policy rates (including the fixed-term rate), but, according to what was learned Scope finally ruled out that possibility and will keep it as it was. This occurs 17 days after the transfer of command between Alberto Fernández and Javier Milei. What are the reasons and how is the performance of the fixed term?
He BCRA increased, in mid-October, interest rates for fixed-term deposits and the Annual Nominal Rate (TNA) was established at 133%, while the Annual Effective Rate (TEA) remained at 253% with a monthly return of 11%. And, although it was considered modifying it, in the end, it will remain the same, for the moment. “They are going to wait,” according to a specialized source informed this medium.
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Some City analysts believed that The BCRA would decide to adjust rates upwards before the new president takes office to contain a possible outflow of deposits towards the dollar encouraged by the expectation of a higher exchange rate.
“As Milei is the elected president, the rate hike should be attractive enough to take the risk of not dollarizing in the face of an imminent devaluation by the next government and of being trapped in a type of “Bonex Plan”, although the president-elect maintained that he will not do so,” he told Ambit he economist Pablo Ferrari.
The BCRA will not raise the rate: why
The specific thing is that, after an arduous analysis of the measure by the board of directors, the BCRA finally decided not to raise the rate. It was expected to do so for between 700 or 1,000 basis points, to tempt savers and cover the expected inflation for November in order to help put a stop to financial dollars and blue, which are rising in recent days.
However, the monetary regulator ultimately decided not to do so. And there is very little time left in the current administration and November inflation was below the fixed term monthly performance traditional (it was 8.3% versus 11% performance).
The next data on the Consumer Price Index (CPI) will only be known on December 12, after the transfer of command and we will have to wait to see if there will be any news at that time. The Survey of Market Expectations (REM) estimated November inflation – which will be known next month – at 11.5%, somewhat above the fixed-term rate.
Source: Ambito
