Decisions Taken by the Monetary Policy Council (COPOM)

November 29, 2019. The BCRA COPOM set the monetary base (MB) target for the coming period and kept the current floor unchanged for the interest rate on LELIQ bills in line with the current economic schedule. The BCRA has made net purchases of foreign currency for USD2.427 billion since October 28, involving a rise of ARS79 billion in the average MB target for November which stood at ARS1,662 billion. The BCRA sterilized part of this rise, as a result of which November’s average MB was ARS94 billion (5.7%) below the target, amounting to ARS1,568 billion1.

Demand for money over December and January evidences a sharp seasonal rise triggered by the collection of the semi-annual complementary wage, year-end and the holiday expenses. In June, the BCRA Board established that minimum cash requirements should be calculated on a two-month basis in order to effectively manage liquidity over the seasonal period. Therefore, the COPOM deems it suitable to calculate the MB target on the basis of the two-month average.

Consequently, and in agreement with the BCRA's projections of demand for money, the COPOM set the MB target at ARS1,732 billion for the December 2019 - January 2020 period. This target is explained by a rise calculated on the basis of November's MB average, which includes the2.5% monthly increase applied since October and the two-month seasonal adjustment done by the estimated impact of the recent tightening of forex controls. The target will be adjusted by the remaining effect of the BCRA's forex transactions carried out in November and those that will be executed in the two-month period.

The relevance to keep a positive real return for depositors has been reinforced in the current scenario. Accordingly, the COPOM kept the floor of the interest rate on LELIQs at 63% annually.

The measures described here have been approved unanimously by the COPOM members. The COPOM is composed of Guido Sandleris, Governor; Gustavo Cañonero, Deputy Governor; Verónica Rappoport, Alternate Deputy Governor; Enrique Szewach, member of the Board appointed by the Board of this Central Bank; and Mauro Alessandro, Economic Research Deputy General Manager.

1. These are preliminary figures based on the information available at the time of publication of this news.


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