Fixed term: almost 90% of the placements were made in a period of less than 60 days

He Survey of Market Expectations (REM) published by the Central Bank began to be analyzed by investors when deciding whether or not to renew the fixed terms. After the perspective of the economists, and waiting for the inflation data that will be released this Friday, a new private report once again gave an indication of the behavior of savers.

Of the total fixed terms, 89.2% were made for a period of less than 60 days, 0.8pp more than last month. According to LCG, this dynamic has been maintained since January 2022. Currently, the average term of term placements is 52.9 days.

Except for three-month placements, the rest of the retail fixed terms have been contracting in real terms since October 2020. Regarding forward forecasts, term deposits “may be negatively impacted in the event of a pronounced gap exchange rate,” LCG said.

Fixed term: should you renew or not?

Let us remember that on March 16, the BCRA raised the Fixed term rates and 28-day Leliqs in 3 percentage points, because it took it to 78% (the Nominal Annual Rate, TNA) which is equivalent to an Effective Annual Rate (TEA) of 113.2% at a monthly yield of 6.41%. The measure was implemented after the CPI data for February was known, which was 6.6%, and the decision arose in response to the fact that, in February, actual performance ex post (relative to prior inflation) of the monetary policy rate it turned negative in the short term (-0.3% of TEM).

Econviews economist Alejandro Giacoia indicates that, apparently, the inflation data for March is going to be bad. “In CABA it gave 7.1% and, at the national level, we expect it to be a similar number.” Thus, as the economist Pablo Ferrari pointed out to Ámbito, “if the CPI corresponding to March 2023 is around 7% and the effective monthly rate (TEM) of the fixed term is 6.41%, the instrument does not protect against the inflation”.

For this reason, taking into account that, for now, a significant reduction in the monthly increase in prices is not in sight (in fact, the REM anticipates that the data for April would be 6.3%) Buteler expects that it will have to rise the rate of the fixed term some points.

The great unknown among analysts is whether the forecast that it will change it is finally confirmed, in How much will the fixed term rate go up? the central. Reschini calculates that if they want to match 7% monthly inflation, the rate should be brought to 85%, but admits that he does not expect the BCRA to be encouraged to make such a sharp adjustment (it should be 700 basis points). And he hopes, in this sense, that “they will surely touch it up less, alluding to better expectations going forward, possibly.”

Giacoia, for his part, anticipates that the rise “it can be two or three percentage points” and considers that this adjustment is not going to have a major impact on how the price rise continues, but that “what the Central is looking for is to try to keep the free quotes of the dollar at bay”.

“I am not sure that the effective monthly rate (TEM), in the case of the traditional fixed term, will exceed the CPI for March even with an increase”, admits Ferrari. And he recalls in this regard that in February it was 6.6% and the TEM of the traditional fixed term was 6.41% (it did not exceed the price index).

Everything indicates that news will arrive regarding the interest rate of the fixed term shortly. However, what will BCRA it will be to evaluate the cost that this implies for the balance of the monetary authority, which will see a negative effect of this measure on its liabilities; the inflationary projections, beyond the data that results for March; and the perspectives for the placement of debt and demand for rates that are presented for the Treasury. Those will be the elements that will determine whether or not to raise it and to what degree.