The Board of the BCRA has decided today to raise the annual percentage rate (APR) on 28-day liquidity bills (LELIQs) by 300 basis points, from 49% to 52%.
The BCRA will also keep in place the mechanisms by which it ensures that the monetary policy interest rate increase is fully passed on to depositors, both natural persons and companies, by way of minimum interest rates on time deposits and time deposits linked to units of purchasing power (unidad de valor adquisitivo, UVA).
Thus, 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 53% APR.
For all other private sector time deposits, the minimum annual rate is 50%.
May's data confirmed the slowdown in inflation that started in April, with a significant decline in the core category. The BCRA expects inflation to continue falling gradually in the coming months.
In turn, the perception of international financial risk has recently increased.
The monetary authority continues to gradually normalize the monetary policy rate and the rest of the interest rate structure of the economy, in order to contribute to preserving financial and exchange rate stability, sustaining output and employment growth, and reducing inflation.
Likewise, in an economy like Argentina's, with a relatively small credit channel, the rise in interest rates acts mainly as an incentive to save in pesos. Therefore, this anti-inflationary effect largely contributes to exchange rate and financial stability, and must be complemented with other economic policy instruments to reduce inflationary inertia.
The BCRA will continue to calibrate monetary policy according to the observed and prospective evolution of the general price level, and will continue to take actions to align its monetary policy with its Objectives and Plans for 2022, in which the authorities' goal was to set a policy interest rate path to obtain positive real returns on investments in domestic currency.
June 16, 2022