Monthly Monetary Report

Monthly report on the evolution of the monetary base, international reserves and foreign exchange market.

Summary

The real monthly average growth without seasonality of private M3 was 4.3% in February and was mainly composed of deposits, both demand and time, since the working capital held by the public, in the absence of the specific factors that had driven it during that period (e.g., extraordinary payments for retirees and beneficiaries of social allowances), significantly reduced its growth. The increase in demand deposits came mainly from the transfer of funds to financial institutions from Mutual Funds passes at the BCRA, after the elimination of this type of operation.

The average monthly balance of time deposits in pesos in the private sector increased 7.3% in nominal terms and 4.7% in real terms. As of this month, the option of saving through pre-cancelable UVA time deposits was implemented, starting after 30 days. 24% of the average monthly increase in time deposits in pesos in the private sector was made up of placements in UVA (both fixed-term and pre-cancelable). The balance of pre-cancellable UVA deposits at the end of February reached $4,600 million, while traditional UVA placements totaled $55,400 million.

The Board of Directors of the BCRA ordered further reductions in the lower limit of the LELIQ interest rate during February. It carried it out on three occasions, for a total of 10 p.p., bringing it up to 40% in nominal annual terms. Interest rates paid on time deposits in pesos decreased to a lesser extent. For example, the TM20 – interest rate for fixed-term deposits of $20 million or more, with a term of 30 to 35 days – of private banks ended February at 32.6%, 1.4 p.p. below its level at the end of January.

Loans in pesos to the private sector, in nominal terms and without seasonality, registered an expansion of 1.8% monthly in February. In year-on-year terms, the increase in financing in local currency stood at 21.2%. The monthly growth of loans in pesos was made up of credit card financing, and to a lesser extent, commercial lines.

With the aim of continuing to improve the conditions of access to credit for MSMEs, which are financed mainly through commercial lines, a reduction from 40% to 35% nominal annual of the maximum rate required for banks to deduct part of these loans from the Minimum Cash requirement was ordered as of February 17.

Lending rates also decreased and, among them, those applied to the lines most associated with commercial activity were the ones that showed the largest falls, driven by the lines of credit that are being granted to MSMEs at lower interest rates. The document discount rate stood at 38.6%, down an average of 6 p.p. compared to January. Meanwhile, the rate applied to single-signature documents averaged 41.6%, showing an average monthly drop of 8.9 p.p.

For financing for consumption, effective as of March, it was decided to promote a sharp reduction in the financing rates of all credit cards, both bank and non-bank. Regarding the financing rate of bank credit cards, it was established that banks may not charge more than 55% nominal annual interest. In relation to non-bank credit cards, it was established that the interest rates of the cards may not exceed 25% of the average of the personal credit rates of financial institutions.