Monthly Monetary Report

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

1. Synthesis

• Total means of payments (M2) reached an average balance of $201,090 million in May, presenting a growth in the month of 0.9% and a year-on-year variation of 19.1%. For its part, the broader aggregate in pesos (M3) showed an even higher growth, of 3.4%, and a year-on-year variation of 21.7%.

• Total deposits in local currency increased by 3.8% (21.4% YoY) in the period, led by the behavior of public sector deposits, driven by resources from tax collection. The concentration of tax maturities in May resulted in a slower growth rate of private time deposits, especially wholesale deposits (of more than $1 million). Meanwhile, retail term placements maintained their monthly expansion rate.

• The ample liquidity in pesos of financial institutions (sum of cash in banks, current account at the Central Bank, net passes with the Central Bank and holdings of LEBACs and NOBACs) remained at 39.9% of their deposits in pesos.

• Loans in pesos to the private sector continued to show great dynamism, driven by loans mainly to companies. The average monthly balance of the total lines stood at $129,480 million, 3% ($3,910 million) above the average for April and its year-on-year growth rate went from 14.9% in April to 17.6% in May. Loans with a mainly commercial destination presented a significant monthly increase, of 5.2% ($2,535 million), led by current account advances, which grew in line with the greater demand for liquidity of companies during tax maturity periods.

• Continuing a policy of monetary regulation aimed at extending the terms of the financial system and promoting financing for the productive sector, at the beginning of June the Central Bank decided to grant funds to financial institutions through advances for a maximum period of 5 years. Such advances will accrue at a fixed interest rate that will be determined on the basis of the interest rate of the operations of passive passes, in pesos and 1 day, for the Central Bank. With these funds, financial institutions may offer loans in pesos to finance investment projects in the productive sector, with an average term equal to or greater than two and a half years, charging a fixed interest rate that will be determined by the Central Bank at the time of each call for auction to award the resources.

• During May, financial institutions slightly increased the interest rates paid on term placements in the wholesale segment, in a context in which companies partially renewed their maturities. The monthly average of the interest rate paid by private banks in the tranche of deposits of more than $1 million and up to 35 days of term (BADLAR) stood at 9.4%, with a slight increase of 0.1 p.p. compared to the level recorded in April, while the variation between the end of May and April shows an increase of 0.5 p.p.. On the other hand, both the monthly average and the month-end levels of the interest rate paid by private banks to retail placements (up to $100,000), for the same term, remained unchanged, standing at 8.7%.

• Interest rates charged on loans to companies continued to decline, while those applied to financing for household consumption remained stable. Among commercial loans granted by private banks in Capital and GBA, the interest rate on current account advances considering the total operations fell 0.9 p.p. compared to the average for April, reaching a level close to 8.8%. Interest rates on personal loans remained stable at a level close to 30.7%.