BCRA Increases Monetary Policy Rate

The Board of the BCRA has decided today to raise the monetary policy rate by 550 basis points. This way, the APR on 28-day liquidity bills (LELIQs) rose from 69.5% to 75%.

Simultaneously, in order to increase savings in pesos, the Board of the BCRA has 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 75% APR. For all other private sector time deposits, the minimum annual rate is 66.5%.

In August, the monthly general and core inflation rates decreased against July, but stood at a relatively high level against previous months. Hence, the BCRA has deemed it necessary to increase once more the monetary policy rate and consolidate the process to normalize the structure of lending and deposit interest rates to ensure a positive yield in real terms.

In the Objectives and Plans for 2022, the BCRA informed that it would resume the guidelines announced in January 2020, leaving behind the period of exceptional policies adopted due to the pandemic. In this sense, a policy interest rate path has been set to obtain positive real returns on investments in domestic currency, and to preserve monetary and foreign exchange stability. The new rates will make it possible to consolidate foreign exchange rate and financial stability, and to boost international reserves accumulation.

Within the framework of the process to normalize monetary policy, the monetary authority 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.

Considering the expected path for the monetary base and the rest of monetary aggregates, the BCRA´s interest rate policy is in line with a reduction in the stock of remunerated liabilities (LELIQs, liquidity notes (NOTALIQs) and repos) in terms of GDP during 2023.

September 15, 2022

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