The BCRA Has Increased the Yield of Savings in Pesos

The Board of the BCRA has decided today to raise the monetary policy rate by 600 basis points. This way, the APR on 28-day liquidity bills (LELIQs) has risen to 97% (155% EAR). The APR on overnight reverse repos has also been raised to 91%.

Simultaneously, in order to maintain the incentive to savings in pesos, the BCRA has raised the minimum interest rate on natural persons’ time deposits. The new floor for 30-day time deposits up to ARS30 million is 97% APR (154% EAR). For all other private sector time deposits, the minimum rate is 90% (138% EAR).

Moreover, the BCRA has reduced by two points the interest rate charged on unpaid credit card balances for natural persons, decreasing as of June from 88% to 86% APR.

The rates on the Credit Line for Productive Investment for micro-, small- and medium-sized enterprises (MSMEs) remain subsidized. The APR on lending for investment projects stands at 76% and for working capital, at 88%.

In April, the 8.4% change in the headline consumer price index (CPI) was boosted by accelerations in the core (8.4%, up 1.2 p.p.) and the seasonal (12.6%, up 3.3 p.p.) categories. In turn, regulated prices slowed down (4.9%, down 3.4 p.p.) in April, after the high record in March.

This measure has been set to obtain positive real returns on investments in domestic currency and to take immediate action to prevent financial volatility from driving inflation expectations.

Moreover, this measure is in line with the short-term interest rates on debt instruments issued by the National Treasury.

The BCRA will keep on monitoring the development of the general level of prices, the financial and forex market dynamics, and the monetary aggregates to calibrate the interest rate policy.

May 15, 2023

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