The Central Bank had to raise the reference rate this Thursday
, pressured by the rise in the dollar and in the midst of a strong crisis within the Government.
The measure
was expected by the market for last Friday
, the same day that the inflation data
for March of 7.7% was known,
the highest in the last 20 years.
"The Board of Directors of the Central Bank of the Argentine Republic (BCRA) decided to raise the monetary policy rate by 300 basis points. In this way, the annual nominal interest rate of Liquidity Bills (Leliq) at 28 days went from 78% to 81%," the agency detailed in a statement.
At the same time, he added: "in order to maintain the incentive to save in pesos, the BCRA raised the minimum limits of interest rates on fixed terms of individuals, leading them to a yield of 81% nominal per year in the case of deposits of up to 10 million pesos and 72.5% annual nominal for the rest of the fixed terms"
The agency's board of directors delayed the decision, but
the rise of the blue this week
, which reached almost $40 in four days,
hastened the initiative
.
With this new adjustment, which only applies to the Leliq rate (of reference in the economy)
and to the yields of fixed terms, the effective annual rate is 119.4%.
The measure does not come without some political tension.
This morning, the president of the Central, Miguel Angel Pesce was summoned by Alberto Fernández to the Quinta de Olivos, as was the Minister of Economy, Sergio Massa.
In the afternoon, both officials met face to face at the Palacio de Hacienda where, according to sources from the Ministry of Economy.
Massa had expected a 500 basis point rise, in line with market expectations, while the central banker was resistant to tightening.
For this reason, an increase of 300 basis points was finally agreed, which for some analysts may be insufficient to contain inflation and stop the jump in the exchange rate.
"We believe that the measure will not have a strong impact on price controls, but is more aimed at reducing exchange pressure. We also emphasize that the increase in rates also occurs within the framework of complying with the agreement with the IMF and thus approach at more neutral real rates," said Rodolfo Leonel Fermani, portfolio manager at Adcap Asset Management
With inflation galloping above 7% per month
, the feeling of the Central Bank
was that a new rate adjustment in this context was "expensive for the economy"
and
not so effective for prices.
The market estimates that the monetary issue associated with this new rate level is around $1 trillion per month, to pay interest on remunerated liabilities.
In addition, the rise in rates is usually contractive for the economy, because it implies an increase in the cost of credit for companies and families.
For this reason, this time, as in the last decision of the Central,
only the yields of the Leliq and the fixed terms were adjusted
and
not the active rates, that is, those that are applied to loans and credit cards.
In the previous one,
the Treasury had also had to validate higher rates, in the order of 130%
, in order to continue obtaining financing from the market, in the midst of renewed exchange tension and with a growing distrust of investors and savers.
With a TNA of 81% and a TEA of 118%, whoever decides to invest $100,000 in a fixed term will obtain $106,657.53 after 30 days.
It represents a profit of $.6,657.53.
If it is compared with the increase in prices in the economy, a nominal rate of 81% per year represents a "premium" of 6.7% per month for making placements in a bank.
But, if inflation in April is indeed above 7%, as most consultants already expect, whoever makes a fixed term for 30 days after this adjustment, would continue to lose against the rise in prices.
NS
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