BCRA Raises Monetary Policy Interest Rate to 60% and Increases Minimum Reserve Requirements in Pesos, LELIQs or NOBAC Notes by 5 p.p.

Buenos Aires, August 30th, 2018. In response to the current international scenario and a new potential impact on domestic inflation, the Monetary Policy Council (COPOM) of the BCRA has unanimously decided to hold an unscheduled meeting and raise the monetary policy rate to 60%. With a view to ensuring the contractionary bias of monetary conditions, the COPOM undertakes not to reduce this new monetary policy rate value at least until December.

Moreover, the BCRA increased the amount of minimum reserve requirements in pesos by 5 p.p. both for demand and term deposits for “Group A” financial institutions as from September 1. The BCRA holds that a closer monitoring of liquidity in the money market is key to strengthen its institutional anti-inflationary commitment. The decision reached as to minimum reserve requirements will change no existing exceptions or exemptions. It will neither affect UVA or foreign currency-denominated accounts and deposits. Financial institutions can comply with increased minimum reserve requirements in pesos, liquidity bills (LELIQs) or NOBAC notes. With the implementation of minimum reserve requirements, the BCRA means to strengthen the shift of the raise of monetary policy interest rate onto the financial system’s deposit rates as well as its impact on price dynamics.