Fixed term: BCRA has already decided what to do with the rate after the December inflation data

He December inflation data which published the National Institute of Statistics and Censuses (INDEC) This Thursday it was 25.5%, in line with what was expected by private consulting firms, which placed it between 25% and 30%. After that news, the market always looks directly to the Central Bank (BCRA) and its rate policy, especially with a Consumer Price Index (CPI) so high and a current yield of the fixed term that loses “as in the war” against inflation (since it is 9%).

However, sources close to the BCRA confirmed to Ambit that The BCRA “will not modify the rates for now”. Thus, the negative interest for the fixed term traditional 30-day 9%, which, with an inflation of 25.5% in December, resulted in a loss for the saver of 16.5 percentage points.

In this way, the monthly yield of these savings instruments becomes 9.04%when until that moment, it was 11% and the annual effective rate (TEA) is around 186.5% (it was 253%).

As explained to this medium by the Equilibra economist Lorenzo Sigaut Gravinathis responds to the fact that The Government already knew that inflation was going to be high and, “when they lowered the rate, they did so in pursuit of the strategy of liquefying remunerated liabilities, which seeks to ensure that they do not grow and that those that exist do so below inflation.”

Consequently, “The Central’s decision is consistent with its general strategy of decreasing the purchasing power of the peso (with low salaries and rising inflation) and is complementary to the extension of the term from 90 to 180 days for UVA deposits“.

Negative rate for the fixed term: the BCRA strategy

“The Government maintains its strategy of 110% rate for the fixed term and 100% monetary policy with the objective of liquefying the stock of paid liabilities. This decision responds to the fact that they are not being able to place, for the moment, the Bopreal Bonds in sufficient quantity to absorb the remunerated pesos,” economic analyst Salvador Di Stefano explains to this medium.

Thus, for Sigaut Gravina, the strategy to liquefy these liabilities is that the rate of liabilities is less than inflation. And, in the same line, the Eco Go economist, Rocío Bisang, wait “that the rate remains at these levels for a while longer“.

Notes that The Government’s strategy to stop inflation seems to be to reduce emissions as much as possible. In that sense, he warns that “one of the main factors that contribute to the expansion of the monetary base is the interest on remunerated liabilities.”

“Negative rates work, in a context where, due to the stocks and little place to locate the pesosas a way of liquefying remunerated liabilities,” explains Bisang.

Consequently, as stated the economist Christian Butelerwhat happens “is not that they have fallen short with rates in a context of accelerating inflation, but that, in the midst of a strong indexation of the economy, which they expected would happen, They decided to liquidate the savings of the people through lower rates”.

And consider that “It is a wrong policy because it can put upward pressure on the dollar at some point.”and a way to scam the saver that has pesos in a fixed period”.

Fixed term: what’s coming

With everything, Di Stefano warns that the longer people stay fixed-term, the more money they will losesince it anticipates that “January inflation will surely be at the same level as in December“and rates seem like they are not going to move for some time to come.

Explain that, with this strategy, The Government managed to significantly reduce monetary liabilities since Javier Milei took office, measured in dollars today. For him, the current administration faced a first stage of liquefaction to then move on, starting in March or April, towards a stabilization plan.

Sigaut Gravina agrees that “the Government is going to maintain this strategy to the extent that no limits are observed“What might those limitations be?”Let the demand for dollars grow, let the gaps begin to widen“.

The floor rate, a double-edged sword

“On the one hand, we want the pesos not to go to the dollar, but, on the other hand, The low rate pushes to dollarize, taking into account that terms and dollars are not the only hedging instruments, but they are the most widely used,” adds Ferrari.

It turns out that, as Buteler suggests, Taking into account our idiosyncrasy, it is likely that savers, with no refuge from inflation and devaluation, will decide, at some point, to run towards the dollar and the gaps with parallel exchange rates will end up through the roof.. But he is confident that, with the agreement with the Monetary Fund (IMF), which involves a disbursement of dollars, it will help counteract the overheating that has been seen recently in the exchange market.

In this context, Sigaut Gravina It is worrying that the Government’s message is “that everyone who saves in pesos is going to lose significantly.”which is not good, beyond the fact that the BCRA is managing to lower liabilities.”