Monthly Monetary Report

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

Summary

• In May, the private M3 broad aggregate moderated its pace of expansion, after the historical record recorded
  in April. Although all its components showed an increase, the greatest contribution to
  growth came from demand deposits and working capital held by the public. The average monthly increase in
  private M2 – without seasonality – was 9.8% nominal and 7.0% in real terms. Thus, the rate of
  payment moderated its growth rate.
• In terms of GDP, monetary aggregates have gained around 4 p.p. so far this year, reaching values similar to those at the end of 2015, when they began to show a downward trend
  until they reached, at the end of last year, historically low levels.
• Favored by the measures adopted by the BCRA to protect the savings in pesos of individuals and legal entities
  , establishing a minimum yield, time deposits in pesos to the private sector grew on average 8.1% nominal (5.4% in real terms). At the end of May, the balance of
  term loans was 7.1% above the levels observed before the “Social,
  preventive and mandatory isolation”.
• Specifically, the BCRA ordered that, as of May 18, the minimum interest rate, equivalent to
  70% of the monetary policy rate (26.6% n.a. and 30.09% y.a.) be extended to all time deposits
  in pesos in the private sector, thus including legal entities, while the amount limit
  was removed. Effective from the same date, the Board of Directors of the BCRA decided to raise the rate with which
  it remunerates 1-day passive passes by 3.8 p.p. to 19%. Additionally, it determined that as of June the minimum rate
  for deposits in pesos from the private sector will be 79% of the LELIQ rate, which is equivalent to
  30.02% n.a. and 34.52% e.a., with financial institutions being able to increase their surplus position of
  LELIQ by 18% depending on the deposits they capture at that minimum rate.
• Driven by trade financing, loans in pesos to the private sector, in nominal terms and without seasonality, registered an expansion of 4.7% monthly (2.1% at constant prices). Although
  May’s growth implies a moderation compared to April, this rate is still among the
  highest in recent years.
• The BCRA continued to adopt measures to favor credit to MSMEs. Thus, it extended the deduction of the minimum cash requirement for those entities that grant loans to companies that
  do not have loans granted by financial institutions through the SME plus line. For its part, the main line
  , to MSMEs and Health Service Providers, accumulates disbursements of $217,586 million at
  rates below 24%, of which $7,000 million corresponded to health service providers. Zero-rate credit is another line recently created to alleviate the financial situation of self-employed workers and single-payers. In May, 286,051 loans were granted (about 16,000 credits
  per day) for a total amount of $35,869 million, of which $11,620 million have already been credited.