The Central Bank of Argentina (BCRA) decided this Thursday to increase its reference rate by two percentage points, to 40% per year, and ordered a general redesign of the monetary policy instruments to reinforce the conditions of macroeconomic stability.
The 28-day liquidity letter ‘Leliq’, which remained at 38% since November 2020, will continue as a reference indicator regarding the orientation of monetary policy, with auction twice a week.
This increase takes effect immediately, and it was reported following 108,858 million pesos (regarding US $ 1,055 million) were auctioned in these bills.
The board of directors “has taken a set of decisions that reconfigures the instruments of monetary policy with the objective of continuing to follow the path of recovery and reinforce the conditions of monetary, exchange and financial stability,” said an official statement.
“These decisions seek a reordering of the interest rate scheme and a simplification of the organization of systemic liquidity,” he added.
The measure was expected by the operators since the monetary authority advanced in its report of perspectives for 2022 the acceleration of the devaluation at the rate of inflation and the fixing of interest that generate positive real returns for holdings in pesos.
Private analysts project a rise in retail prices just over 50% for both 2021 and 2022.
From the International Monetary Fund (IMF) They did not immediately comment on the BCRA changes, at a time when Argentina and the multilateral organization have not yet reached an agreement to refinance some US $ 45,000 million due to discussions regarding the way in which the country should reduce its fiscal deficit.
The official entity also ordered an increase in the fixed terms to 39% guaranteed for human persons, up to 10 million pesos, while it created a 180-day “Leliq” with a yield of 44% (with weekly bidding), to make it disappear The passes to seven days progressively, although those arranged for one day remain in force.
“Throughout 2022, the factors that put pressure on the general price level are expected to subside. Exchange and interest rate policy, together with prudent liquidity management, will contribute to improving exchange rate expectations ”, added the BCRA.
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