Increase in the Monetary Policy Rate and the Rate on Time Deposits

The Board of the BCRA has decided today to raise the monetary policy rate. This way, the interest rate on 28-day liquidity bills (LELIQs) has risen to 133% APR.

Simultaneously, in order to reinforce savings in pesos, the Board of 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 133% APR (11% effective monthly interest rate). For all other private sector time deposits, the minimum annual percentage rate is 126%.

In September, the monthly inflation rate stood at 12.7%, boosted by the statistical carryover of price acceleration observed in August after the adjustment to the official exchange rate.

However, high frequency indicators keep on showing a slowdown in the growth pace of the general level of prices from the peak observed in the third week of August, suggesting a significant slowdown in October.

In this sense, the BCRA deems it necessary to increase the interest rate structure of the economy for this trend to consolidate, reduce financial volatility during the electoral period and favor the accumulation of international reserves.

The BCRA’s interest rate policy seeks to obtain positive real returns on investments in domestic currency to preserve monetary and foreign exchange stability.

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

October 12, 2023