The Central Bank raised the yield on time deposits in pesos. For human persons, the new floor of interest went from 39 to 41.5 percent per year for placements within 30 days up to 10 million pesos, which represents a yield of 50.4 percent of the effective annual rate. For the rest of the fixed-term deposits of the private sector, the guaranteed minimum rate was established at 39.5 percent, which represents an effective rate of 47.5 percent.
The bet is that the yield of having a fixed term in the financial system begins to be above inflation, which currently stands at around 50 percent. In January it stood at 3.9 percent per month, somewhat below market expectations but at levels that continue to be very high. This seeks to protect the purchasing power of savers while generating disincentives for the dollarization of assets.
The measure was taken this Thursday by the board of the Central Bank and was implemented through a rise of 250 basic points of the Liquidity Letters (Leliq). In turn, the entity decided to create the Liquidity Note (Notaliq) at 180 days. This is a new instrument for managing monetary policy that aims to extend the terms in which the quasi-fiscal debt is placed.
At the Central Bank, he recalled that in the Objectives and Plans for 2022 it was reported that “the period of exceptional policies generated by the pandemic was beginning to be left behind and the guidelines set forth in January 2020 were resumed.”
“In that sense, the first rate hike took place in January and now said strategy is being adjusted” aiming to achieve “positive real returns on investments in local currency and to preserve monetary and exchange stability.”
The reference interest rates in pesos are as follows. The Leliq at 28 days will have a yield of 42.5 percent annual nominal; Leliq at 180 days, 47 percent. The new Notaliq will have a variable rate, equivalent to the effective annual yield of the Leliq at 28 days.
On January 6, at its first meeting of the year, the entity’s board had raised the performance of the Leliq to 40 percent, after more than a year to 38 percent.
At the same time that the increase in the monetary policy interest rate was decided, the Central Board raised the minimum limits of interest rates on fixed terms. In this way, savers with less than 10 million pesos will be able to make time deposits at annual rates of 41.5 percent, 2.5 points higher than the previous minimum.
In a report from the monetary authority, it was also specified that the rest of the interest rates regulated by the entity will not have changes. This allows consumption stimulus programs such as the Now 12 plan and the rate for the financing of unpaid credit card balances do not rise. The measure is key to avoiding an impact on consumption in the domestic market, which has registered significant movement in recent months.
At the same time it was announced that the subsidized rates of the productive investment lines will be maintained at 30 percent, and for working capital at 41 percent. This is one of the key credit programs to stimulate and promote the recovery of small and medium-sized enterprises.
Through these subsidized loans, more than 1 billion pesos in financing were offered, which first allowed them to support SMEs during the worst phase of the health crisis and then helped their recovery.