The Board of Directors of the Central Bank of Argentina (BCRA) today decided to raise the nominal annual interest rate on Liquidity Bills (Leliq) to 28 days by 200 basis points, from 42.5% to 44.5%.
In line with the increase in the monetary policy interest rate, in order to promote its full transmission to the return of peso term deposits, the Board of Directors of the BCRA raised the minimum interest rate limits on fixed terms.
For individuals, the new floor is set at 43.5% per year for 30-day deposits up to 10 million pesos, which represents a return of 53.3% of the annual effective rate (TEA).
For the rest of the private sector deposits, the guaranteed minimum rate is set at 41.5%, which represents an Annual Effective Rate of 50.4%.
Active interest rates remain at favorable levels, especially for investment and production, and the MiPyME sector. Additionally, the BCRA will continue to regulate certain key rates for household consumption.
In its Objectives and Plans for 2022, the BCRA reported that it was beginning to leave behind the period of exceptional policies generated by the pandemic and was returning to the guidelines announced in January 2020. In this sense, the rate hikes occurred in January and February, and now this strategy is being adjusted in order to establish a monetary policy interest rate path in order to promote positive real returns on investments in local currency and to preserve monetary and exchange stability.
It is worth mentioning that the world economy is facing a supply shock that translates into price increases for all commodities and other key products in the productive chain of extraordinary dimensions. Wheat, corn and soybeans, but also oil, gas and fertilizers are some of the examples of increases in prices of raw materials and inputs that directly and indirectly affect prices in Argentina. The national government is developing measures to mitigate the impact on local prices of this international shock.
