Monthly Monetary Report

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

Summary

• The demand for money continues to recover gradually, as a result of the framework of monetary and financial stability derived from the countercyclical policies developed by the Central Bank. Thus, in September the total means of payment (M2) showed growth again, and were within the range established in the Monetary Program, reaching an average of $178,700 million (9.8% YoY). Meanwhile, private M2 presented an average value of $148,800 million (7.6% YoY).

• Total deposits in pesos showed a monthly expansion of 2.5%, with increases in both private sector placements and those corresponding to the public sector. Time deposits accounted for the largest share of the increase in private deposits, with significant growth in both the wholesale and retail segments. In this way, private term placements in pesos completely reversed the fall they had presented in the second quarter of the year.

• The proportion of liquid assets in pesos (current accounts at the Central Bank, cash, net passes with the Central Bank and LEBAC and NOBAC) of the banks in terms of deposits in the same currency amounted to 35.6%. In the month, a decrease in the net position of passes with the Central Bank was observed, which was more than offset by the increase in the holdings of LEBAC and NOBAC, reflecting a less conservative management of liquidity, in a scenario of less uncertainty.

• The Central Bank continued to deepen its countercyclical monetary policy, and ordered a new reduction, of 0.25 p.p., in interest rates for pass operations. Thus, the interest rates on passive passes were set at 9.25% and 9.75%, for 1 and 7 days, respectively, while the interest rates on 1-day and 7-day active passes were set at 11.25% and 11.75%, respectively. Thus, in the last three months, the cumulative reduction in reference interest rates established through the pass market reached 1.25 p.p..

• The main interest rates in the money market, both passive (deposits) and active (loans), showed significant decreases in the month, in line with the reductions made in the Central Bank’s reference rates. The BADLAR rate, corresponding to wholesale time deposits, stood at 12.2%, with a decrease of 0.5 p.p. compared to the average recorded in August. For its part, in the interbank loan market, the interest rate for 1-business day operations averaged 9.2% in September, 0.3 p.p. below the level it presented in August.

• In the most traded segments of loans in pesos, interest rates registered decreases greater than those observed in passive interest rates, registering a reduction in spreads. Among the commercial loans granted by private banks in Capital and GBA, the average interest rate of the most traded segment, corresponding to advances to companies for up to 7 days for amounts exceeding $10 million, stood at 14.3% with a monthly decrease of 0.8 p.p..

• Since mid-August, loans in pesos to the private sector began to show signs of renewed dynamism, led by financing for consumption. Thus, in September the total number of loans increased by 0.8% ($920 million) in its monthly average. In particular, loans mainly for consumption exhibited a monthly increase of 1.6% ($730 million), the largest monthly expansion since November 2008.