The Board of the BCRA has decided today to raise the APR on 28-day liquidity bills (LELIQs) from 52% to 60%, which represents a 79.8% EAR.
The BCRA has further raised the minimum limits of interest rates on natural persons’ time deposits. The new floor for 30-day time deposits up to ARS10 million is 61% APR, which represents an 81.3% EAR.
For all other private sector time deposits, the minimum rate is 54%, which equals a 69.6% EAR.
The economy is facing an increase in price volatility within a context of financial fluctuation not related to Argentina’s macroeconomic fundamentals.
In line with the Objectives and Plans for 2022, the BCRA deems it necessary to accelerate the process to normalize the policy rate and the rest of the interest rate structure of the economy to ensure a positive yield in real terms and contribute to preserving financial and foreign exchange rate stability. These actions are expected to contribute towards consistently reducing inflation.
In addition, coordinated efforts with the Argentine Ministry of Economy have been intensified in the past few weeks in order to establish a financial strategy to gradually decrease monetary financing to the Treasury. Within this context, it is worth highlighting the interest rate structure or corridor with reasonable spreads among BCRA instruments (LELIQs and repos) and Treasury bills (Discount National Treasury Bills in Pesos (LEDES)). The positive outcome of the latest auctions of debt instruments in pesos—in terms of net financing—strengthens the prospect of a decreasing stock of BCRA's remunerated liabilities in terms of GDP.
Within the framework of the process to normalize monetary policy, the BCRA will continue calibrating the policy interest rate paying special attention to the past and prospective development of the general level of prices and the forex market dynamics.
July 28, 2022