Summary
As of October, the new monetary policy framework began to be implemented. The BCRA pledged not to increase the balance of the monetary base above the average level it presented in September ($1.271
trillion). In October, the established goal was met: the average monthly balance of the monetary base was $1.252 trillion, 1.5% below the September level.
The implementation of the new framework is carried out through daily LELIQ auctions, in which an indicative placement amount and the minimum interest rate are announced daily. The amount of LELIQ awarded determines the daily expansion of the monetary base and the cut-off interest rate. At the end of October, the average rate resulting from the placement of the LELIQs stood at 68%, compared to the 65% that had been set at the end of September.
To absorb the expansion associated with the continuation of the LEBAC dismantling process, in October the BCRA ordered a 3 p.p. increase in the minimum cash requirements on deposits in pesos, which can
be integrated with LELIQ.
It also provided that the increase in the reserve requirement corresponding to the growth of time deposits can be fully integrated with LELIQ. This favored the transfer of the LELIQ rate to the
fixed-term rate. The TM20 of private banks averaged 53.8% in October, 10.2 p.p. above September, while the BADLAR of private banks averaged 50.7%, 8.9 p.p. more than last month.
The better yields led to time deposits going from an average monthly nominal growth of 3.5% in the July-September quarter to 10.5% in October. Part of this growth was fueled
by the funds released from the partial renovation of the LEBACs and also by the placements that were previously in sight.
Loans in pesos to the private sector continued with the downward trend they have been showing since the middle of the year. In real and seasonally adjusted terms, they fell by 5.3% in
October, with a generalized decrease in all credit lines. The evolution of loans to companies (non-agricultural) was correlated with the dismantling of part of their position in foreign currency,
which reflects the substitution of sources of funding.
