The Central Bank the yield of the traditional fixed term rose for the last time on September 15 lastafter the inflation data for August was known.
This Friday the September price index of the National Institute of Statistics and Censuses was published: it was 6.2%, lower than the previous month and lower than market expectations and it is a figure that reinforces the possibility that iProfesional anticipated that the Central does not raise the rate again in October Or do it at a very low level.
Let us remember that the BCRA has been raising this index month by month throughout this year and, on the last occasion, it raised the Annual Nominal Rate (TNA) to 75%, which is equivalent to at a monthly effective rate (TEM) of 6.25% and an annual effective rate (TEA) of 107%.
As the chief economist of the Research Foundation for Development (FIDE), Nicolás Zeolla, says in dialogue with iProfessional, “interest rates have to keep pace with inflation due to how financial policy is working, since the Government has decided be financed in the local market and, for this, it needs these to be positive, at least by the Treasury”.
But let’s remember that the BCRA ordered that the monetary policy would be set by a broker of rates in which the floor is made up of the yield percentage of the LELIQs and that of repos and the ceiling is the interest percentage set by the Treasury, so the latter could advance with an adjustment and the BCRA, no or, yes, but more moderately.
Fixed term: what will happen to the interest rate
Consequently, if September inflation had been 7% or close to that number, as much of the market expected, the fixed term monthly yield (TEM) would have been well below that level at 6.25%. But considering the 6.2% figure finally published by INDECwould be at an acceptable levelthough not positive yet on a month-to-month basis.
“This level of monthly inflation is similar to the TEM and, in this way, the performance of the traditional fixed term would be converging with the UVA”, explains the economist Pablo Ferrari. And he points out that, with the current monthly inflation, the current rate would not be positive in real terms but neither would it be negative.
Whereas, if 107% of the TEA is taken as a parameter, compared to the 100% per year forecast by the Survey of Market Expectations (REM), it is a performance that beats inflation. And, even more soaspect of 95% that guides the Budget 2023 being debated in Congress.
The inflation data for September is high, but lower than that for August.
Thus, although It is true that month by month it does not beat the price index at this time, in the annual accumulated profit it does exceed the expected inflation for all of 2022.
And at this point Ferrari indicates that, if this level of monthly inflation of around 6% were repeated in the coming months, something that is not certain, annual inflation would be around 98%, lower than the TEA of traditional fixed terms.
Consequently, as estimated by the director of CyT Economic Advisors, Camilo Tiscornia, the BCRA could not advance with an upward adjustment of rates this month and “claim that it does so because inflation was a little lower than expected and lower than that of August (including the core)”.
Fixed term: the risks of not raising performance
However, for Salvador Di Stefano, a well-known economic adviser in the City, this would be a big mistake because he warns that the Government thus risks a shot of the dollar. “In fact, in the last few days, there has been a sharp rise in financial dollars,” she warns.
On the other hand, Zeolla remembers that a rise in regulated prices is coming, which would put even more pressure on the inflation rate. That would make, according to Tiscornia’s vision, “that the indexation of the economy in October is above 6%”.
Before this panorama, It is very likely that the BCRA will not advance in a fixed-term rate hike this month and wait for the October inflation data to take that step or opt for a moderate increase now. In fact, according to the economist Federico Glustein, there is a version in the City that the BCRA “can raise the rate by around 150 points” to 76.5%.
The BCRA could go from raising the rate this month with the September inflation data on the table.
All these analyzes will be confirmed next week, surely. The truth is The possibility that the BCRA does not adjust the yield of the fixed term this month is concrete and the monthly inflation figure of 6.2% seems to be one more figure that strengthens this hypothesis.