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How much will the fixed terms yield with the new interest rate increase?

The Central Bank’s Board of Governors raised the key monetary policy rate on Thursday by 950 basis points, and fixed interest rates have started to yield 69.5% annually.

11 August 2022 21.42

The Central Bank’s Board of Governors raised the key monetary policy rate on Thursday by 950 basis points, and fixed interest rates have started to yield 69.5% annually.

The 28-day annual nominal interest rate on the liquidity bills (Leliq) also fell from 60% to 69.5%.

“Seeking to increase incentives to save in pesos, BCRA raised the minimum interest rate on fixed terms and set the new floor at 69.5% per annum for 30-day deposits up to 10 million pesos.”specifies the monetary authority.

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For the rest of the fixed deposits of the private sector, the guaranteed minimum interest rate is 61%.

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Why

La inflation

After two months in which inflation showed a decline, ““prices accelerated in July in the context of the increase in financial volatility at the local level, and this had a negative impact on inflation expectations,” BCRA said.

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He said that because of this, he believes it is necessary to raise the monetary policy rate once again and thus “accelerate the normal process of organizing the active and passive interest rates of the economy to bring them closer to a positive landscape in real terms.” , in line with the goals and plans for 2022 set in December 2021″.

Serge Massa
Serge Massa

I am confident that the “rate hike will help moderate inflation expectations for the rest of the year and consolidate the financial and exchange rate stability achieved after the disruptive events of the last two months that led to BCRA’s intervention in the economy.” official title secondary market’.

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What

BCRA assured that “it will continue to calibrate policy rates within the framework of the ongoing monetary policy positioning process, with particular attention to past and prospective developments in general price levels and foreign exchange market dynamics.”

In this sense, it put Leliq’s rate at 180 days, which is an effective annual level lower than that corresponding to 28 dayswhich predicts a slower inflation process.

“In order to maximize the transmission of monetary policy rates to the different parts of the financial system and the capital market, the possibility will be opened for the collective investment funds to negotiate repo operations with the BCRA,” he said.

He said this move “added by deepening coordination efforts with the nation’s Ministry of Economy so that BCRA’s interest rate structure shows a reasonable load with the accounts of the Treasury.”

  • Written by Jos Calero for NA


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