Fixed term: the BCRA has already defined what to do with the rate and the banks anticipated the move

Fixed term: the BCRA has already defined what to do with the rate and the banks anticipated the move

The monetary regulator plans to maintain the path it began five months ago and is preparing to give signals to the market after knowing the inflation data and in view of the Treasury tender.


He Central Bank (BCRA) continues with its policy of liquefaction of pesos in the economy and does so, beyond with the objective of controlling inflation (given that it is one of the price anchors used by the economic team), in order to promote the placement of Treasury debt. “The Government needs money,” says a market source Ambit.

In that context, given that This week the national Treasury faces a new placement of debt in pesosCity analysts anticipate that there could be a new rate cut of around 500 (5%) and 1,000 basis points (10%), which would leave the annual nominal yield (TNA) between 45% and 40 % (3.5% or 3.3% monthly).

This is in line with the yields of the instruments that the Treasury has been tendering given that, as stated the economist Federico Glustein, “the LECAPs are operating at an effective rate of 3.4% per month.” Therefore, it is expected that between this Tuesday and next Thursday there will be a drop in the rate.

This, on the other hand, would be in line with the single-digit inflation that the National Institute of Statistics and Censuses (INDEC) will publish for April this Tuesday. He Consumer Price Index (CPI) of Argentina would have scored a variation of 9% in Aprilwhich would return to levels at the beginning of the fourth quarter of last year, according to the median of a Reuters survey, from the historic 25.5% of last December.

Banks anticipate lower rates

The banks They have been discounting this level of rates for weeks now given that they offer those who place a 90-day fixed term returns well below the monetary policy rate. “We are talking about some entities that pay around 40% annual return,” says a source in the banking sector.

So, the drop in inflation added to the Treasury’s need to have greater income with its instruments and the BCRA’s willingness to liquidate liabilities that has accumulated, are three elements that combine to anticipate a drop in rates this week. “Everything is set for the rate to continue falling this week in view of the bill bidding next Thursday,” said a bank operator.

In its latest rate cut, the BCRA argued that it did so “in consideration of the financial and liquidity context” with a “rapid adjustment of inflation expectations, in the strengthening of the fiscal anchor, and in the contractionary monetary impact.”

Once this market bet is confirmed, the current management of the BCRA, headed by Santiago Bausili, will have accumulated six rate reductions in just over five months. It is worth remembering that the monetary authority reduced the rate to 50% annually at the beginning of May, from a previous 60%, a very low level compared to the 133% that Javier Milei received from the previous government administration.

Source: Ambito

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