So, The monthly effective yield (TEM) was set at 2.67%, somewhat below October inflation, which was 2.7% and expected for Novemberwhich -according to private estimates- will be between 2.8% and 3%. This information will only be known on December 11, but the Central Office is ahead of that date with this measure.
It is worth remembering that Banks no longer apply regulated rate to fixed termbut they set it according to their criteria. It is expected that there will be a downward adjustment, although some choose to give a better performance because They need greater liquidity to face an increase in credit demand that is seen these days. Many dismantle the LEFI to counteract this greater demand for pesos, but others do not have those instruments under their belt and resort to seeking more flow.
Also, this Thursday The BCRA also modified the interest rate on active reposwhich was reduced from 40% to 36%. These percentages will apply from Friday, December 6. And, as explained by the BCRA, “the Board’s decision is based on consideration of the consolidation observed in expectations of lower inflation.”
Rates: a cut expected by the market
“I think it is a cut that the market clearly did not discount and that possibly, this time, it is a play more in line with inflation expectations,” says analyst Andrés Reschini, from F2 Soluciones Financieras to Ámbito.
And the market expected that the BCRA would make a move in the medium term. He had already done so on November 1, when he raised the monetary policy rate from 40% to 35%. It was the first in five and a half months that this variable was modified, since the previous drop had been on May 14 of this year, and now it is doing it again.
“As inflation goes down, cut the rate. Positive real interests will cease to be a priority and a convergence of the devaluation index, the performance of instruments in pesos and the price evolution of the economy will be sought,” he points out. Elena Alonso. One of the objectives of this measure, according to the economic and financial analyst at Emerald Capital, is to reactivate consumption and activity because, having sterilized so many pesos, it is necessary to provide more liquidity and encourage credit.
In fact, credit has grown strongly recently, encouraged by the fall in rates. “Let’s hope that the BCRA lowers the interest rate even more so that credit continues to be encouraged,” a fintech businessman said last week at an end-of-year event, noting that I wanted them to do it quickly because then they could further expand the customer financing business.. And some voices in the city thought that this new adjustment was only going to arrive in January because the inflation expectation for November and December is a little higher than that of October.
The risk of rate cuts, the pesos going to the dollar
In fact, the BCRA’s Market Expectations Survey (REM) estimated 2.8% for last month and 2.9% for the next. Meanwhile, the banks and consulting firms that participate in this report expect the Consumer Price Index (CPI) to slow down again at the beginning of 2025 until reaching 2.1% in May.
“The forward perspective is a decline and the Government shows that it is confident in the deceleration pathalthough these measures usually have an impact on exchange rates and we have to see what happens this time,” says the economist Camilo Tiscorniafrom CyT consulting firm. And there is a perception in the city that the US currency is cheap these days in Argentina.
However, with parallel exchange rates as low as they are today, there appears to be room for an upward adjustment for now. Let us remember that the blue dollar already fell $65 in the first four business days of December, after falling another $15 the previous week. Thus, it is trading at $1,055 and is getting closer and closer to the retailer, which operates at $1,042.17. Financials also follow this trend and are below $1,100. That, added to the fact that, as Tiscornia points out, the dollars from the liquidation of wheat from the field will soon enter the BCRA, provides a bit of calm regarding a possible upward pressure generated by this rate cut.
As pointed out the economist Pablo Ferrarri“the parallels are downward and the official exchange rate is in line with the plan that is underway.” And he assures that, as they have a plan to lower inflation and align expectations, they implement this new rate reduction.
Source: Ambito
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