Central Bank raised 30-day fixed terms rate to 61%

Between the versions of government changes with the arrival of Sergio Massa and the market response through the rebound of bonds and stocks, the Central Bank has put an adjustment of the monetary policy rate to make it more in tune with the latest measures by the Minister of Economy, Silvina Batakis, and to add attractiveness to the pesos debt.

Central is pink today 800 basis points the interest rate of the Leliq, in what so far is the largest rate hike in the Alberto Fernández administration. It does so a day after the Treasury agreed to pay an effective annual rate of 90% for the placement of new debt in pesos.

In addition, he raised the minimum limits of interest rates on the fixed conditions of human persons, establishing the new floor at 61% per annum (81.3% in actual annual terms) for 30-day deposits up to 10 million pesoswhich represents a return of 81.3% in actual annual terms.

With this measure, Miguel Angel Pesce’s team has the monetary policy rate from 52% to 60%, in a signal to support pesos placements and present them as a viable option in the face of growing dollarization. The rate is equivalent to an annual effective rate (TEA) of 79.8%.

Central also raised the overnight repo yield by 850 basis points to 55% of TNA.

The rate hike by the Central came just hours after the Ministry of Economy yesterday raised the Ledes rate to 70%. This allowed the Treasury to capture 190 billion dollars in addition to deadlines. Net funding reached $ 318 billion in the month.

This result was a consequence of the rate hike ordered by Batakis, who paid an annual nominal rate of 70%, which brought the effective annual rate of Lede expiring in October to 90%.

Now the wait is to see if the Central announces an increase in the rate for the fixed conditions of savers, whose performance was pegged at 53% per annum. With current rates, last modified 45 days ago, these placements are losing more bodies than inflation which accumulates a rise of 64% over the past twelve months.

But the underlying unknown is if Miguel Pesce will continue to lead the Central or will have to give up his position if the announced landing of Sergio Massa as super-minister of the Economy becomes concrete. From what has emerged so far, Massa’s intention is to control the sources of the power station, for which he would put a trusted economist at the head of the institution.

AQ