The market closely follows the BCRA’s strategy to reduce the pace of devaluation in line with the decline in inflation. Analysts give their opinion on the effects on investments.
He Central Bank (BCRA) announced this Tuesday that starting in February the pace of “crawling peg” that applies to the appreciation of the peso against the official dollar. It will take it from 2% to 1%, in line with what the president had anticipated in public statements Javier Milei. Now, The market expects a reduction in the monetary policy ratewhich today stands at 32% nominal annual, which is equivalent to a monthly return of 2.92%.
“The Government will continue with a ‘political key’ management of the exchange rate, which is why it will reduce the monthly devaluation to deepen disinflation in an election year,” he told Scope the economist and director of MyR, Fabio Rodriguez. The decision was made after the inflation data for December 2024which was 2.7%, according to the National Institute of Statistics and Censuses (INDEC).
The rate cut that the market expects
After that announcement, the expectation in the city is that cut the rate to around 30% or 27%from the current 32% that was set a few weeks ago. That would take it to around 2.5% or 2.2% per month, which will affect the yield that banks pay for fixed-term deposits. The decision may come this Thursdayafter the board meeting of the monetary regulator.
“The BCRA will soon implement another rate cut, which we expect to be around 500 basis points. We estimate that it will be a reduction of up to 27%, which will leave a monthly rate of 2.2%, preserving high levels of rates in dollars, necessary to maintain the current incentives for exporters and importers, and thus preserve the exchange rate anchor,” anticipates the daily report from Max Capital.
“I think they will cut it to 30% annually, but they should lower the rate 8 points, or at least 27%,” he told Scope the market expert Salvador Di Stefano. He pointed out that, if the devaluation rate is lowered by 50% and the interest rate is almost nothing, it will imply that prices will melt due to recession. “Active rates are very high, anyone who does not begin to restructure liabilities is in the oven,” he warns.
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A necessary cut, but with risks
The lowering of rates is necessary, above all, after the announcement of cut of “crawling peg” and with the inflation path, which marked a slight monthly rise in December, although the market expects it to slow down.
However, there are some elements that can influence this decision. One of them is the Treasury rate cut in the tender carried out this Wednesday Economy. It was between 2.15% and 2.27%, in line with a TNA of 27% or lower.
“A sharp drop in rates is coming if they cut the Treasury rates so low. It would be a cut of between 8 and 10 points,” says a city source.
Although this would give air to the “carry trade”this is news that It goes against the agreement with the International Monetary Fund (IMF). And the body demands positive real rates. The Government aims to obtain a new disbursement and negotiates with it at this time.
However, the EcoGo economist Rocio Bisang warned that “today, the market’s optimism is based on the ‘carry trade’ scheme and any setback in that sense (whether a bad rate policy, the perception of an overappreciation of the peso, etc.) can be complex and force an exit that complicates the dynamics of the program”.
Source: Ambito
