Fixed term: the Central Bank defines what to do with the interest rate in September

Days after the INDEC spread the information August inflationthe Central Bank (BCRA) finishes defining what it will do with the interest rates which are located at 118%. He Consumer Price Index (CPI) It will be announced this Wednesday, September 13 and is expected to be greater than double digits after the devaluation.

As part of the agreement with the International Monetary Fund (IMF), In each review, the organization encourages Argentina to maintain positive rates. In the midst of the devaluation, the BCRA On August 14, the reference return of the Fixed deadlineswith the aim that savers remain in the national currency and do not seek to dollarize their holdings.

For the moment, the Central Bank continues to evaluate whether to raise the interest rate that pays 10% monthly (118% TNA), although the option that is gaining the most is to maintain it. There are reasons to tip the balance towards that option: in the first week of September, food prices slowed down the pace of increases after two weeks of strong increases due to the devaluation.

Fixed term: what do analysts think?

Federico Zirulnik, chief economist of the Scalabrini Ortiz Center for Economic and Social Studies, “if you want to continue supporting a positive rateyou’re going to have to raise it again.”

It is worth mentioning that the positive rate path It is a requirement demanded by the International Monetary Fund (IMF) within the framework of the debt payment agreement that the country signed with the organization, and, at the same time, it is a tool to contain inflation and the dollarization trend of savings.

In order not to abandon that path, taking into account that the monthly effective performance of the fixed term is today 9.7% against an inflation above 10%, the BCRA ought raise the rates one more time. This is confirmed by the director of CyT Economic Advisors, Camilo Tiscornia, when he points out that “it should be higher” in relation to the inflation planned.

Yes

However, like the rest of the analysts consulted, Tiscornia considers that “it is very likely that he will not upload itabove all, taking into account that it is a measure that would worsen the quasi-fiscal deficit (the interests that the BCRA pays to banks for liquidity letters).

Likewise, Zirulnik indicates that it must be taken into account that, beyond the August peak, as a consequence of the devaluation and the announced measures, “It is likely that, by September, inflation will drop somewhat” compared to the previous month.

Thus, as Sergio Chouza, director of Consultora Sarandí, indicates, everything indicates “that the most prudent attitude, today, would be to leave fixed term rate stable at 9.7% effective monthly, with 118% nominal annual and 209% effective annual, beyond the inflationary flash of the month of August.”