Monthly Monetary Report

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

Summary

• Monetary aggregates maintained their relatively stable pace of expansion in October. In particular, the broader monetary aggregate in pesos (M3) registered a year-on-year variation of 35.6%, which was in line with the levels observed since July. On the supply side, the main factor of expansion of the M3 was the increase in loans in pesos to the private sector, which accelerated compared to September.

• The increase in M3 continued to be led by fixed-term deposits from the private sector, which completed a monthly growth of 2.1% and accelerated its year-on-year variation by around 47%. The increase in October was driven by both placements of less than $1 million and those in the wholesale segment.

• Loans in pesos to the private sector accelerated their growth rate, registering a monthly increase of 4.3% ($28,500 million), which was the highest since the beginning of 2013. Consequently, the year-on-year variation registered a new increase of 1.3 p.p. and stood at 33.6%. The lines that led the growth of the month were documents, credit card financing and personal loans.

• In the context of the great dynamism shown by loans in pesos during October, the liquidity ratio of financial institutions in the segment in local currency (sum of cash in banks, the current account of entities in the Central Bank, net passes with such entity and the holding of LEBAC) decreased compared to September. remaining at high levels (36.9% in terms of deposits in pesos). Among its components, the reduction was associated with lower LEBAC holding.

• In order to continue promoting savings in national currency and in addition to the measures adopted since the end of 2014, on October 27 the Central Bank decided to increase by 300 basis points the remuneration of LEBACs in pesos at a predetermined interest rate, which will generate an increase in the minimum remuneration that savers receive for their fixed-term deposits as of November. Thus, for example, the minimum rate for deposits of up to 44 days will be 26.32% and that of deposits of 180 days or more will be 29.08%.

• In October, the interest rates paid by private entities for fixed-term deposits of up to $100,000 and up to 35 days of term stood at 23.5%, in line with the minimum values established by the BCRA for this period. For its part, the BADLAR of private banks increased 0.4 p.p. compared to September, averaging 21.6%.

• Likewise, the Central Bank aligned the interest rate corridor to the LEBAC interest rate curve, adapting it to the new market rate structure. Thus, as of October 27, the rates of the pass corridor increased 300 basis points, so that the interest rates on passive passes for the terms of 1 and 7 days stood at 21% and 23%, respectively. For their part, active passes went on to stand at 26% and 27%, for the same terms.

• Interest rates on loans to the private sector showed mixed movements. While interest rates on current account advances increased in line with what happened in the interfinancial markets, in the face of specific liquidity needs; those applied to financing with collateral decreased and those corresponding to personal loans remained relatively stable.