The entity’s board of directors made the decision after the 6% rise in the consumer price index (CPI) for April, which the INDEC made official this Thursday, a figure below the 6.7% of March, but above what was expected by the market. Private analysts had estimated inflation of 5.5% for the fourth month of the year, bringing the accumulated rate to 65.1% for all of 2022, according to the April Survey of Market Expectations (REM).
The monetary authority had just adjusted upwards its reference yield of the Liquidity Letters (“Leliq”) to 40% in January (from 38% previously), to 42.5% in February, to 44.5% in March and to 47% in April. With the new rise this Thursday, the rates accumulate an increase of 1,100 points so far this year.
It is that a positive real rate is one of the points agreed between Argentina and the IMF in the agreement that they closed in March to refinance a debt of 44,000 million dollars.
The BCRA indicated in a statement that “It will continue to regulate certain key rates for family consumption. As suggested by the high-frequency indicators monitored by the BCRA, in April there was a slowdown in the general level of prices compared to the rise registered in March.”
In this sense, the entity led by Miguel Pesce “He expects inflation in the coming months to continue to decline gradually. The current international financial conditions and the recent behavior of the commodity markets suggest that some stability in commodity prices may have been achieved,” he said in a statement.
Russia’s war on Ukraine triggered global inflation with the rise in raw materials, forcing most central banks to raise their rates, in the face of a general slowdown in the international economy.
Indeed, the BCRA said that “it will continue to monitor the evolution of prices and will evaluate reversing the bias of the monetary policy as soon as a downward path of the inflation rate is consolidated”.
On the other hand, the Central highlighted that “active interest rates remain at favorable levels, especially for investment and production, and the MSME sector. The Productive Investment Line has an annual nominal rate of 37% and the Working Capital Line of 47.5 %”.
How are the rates of fixed terms
In line with the rise in the monetary policy interest rate, in order to promote its full transmission to the return of time deposits in pesos, the BCRA Board raised the minimum limits of interest rates on fixed terms.
For individuals, the new floor was set at 48% (Annual Nominal Rate) -from the previous 46%- for 30-day deposits up to 10 million pesos, what a represents Annual Effective Rate (TEA) of 60.1%. In monthly terms, this is a yield close to 4%.
For the rest of the fixed-term deposits of the private sector, the guaranteed minimum rate is established at 46% TNA -from the previous 44%-, which is equivalent to an Annual Effective Rate of 57.1%.
Source: Ambito
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