The recent cut in interest rates by the Central Bank of the Argentine Republic (BCRA) has generated a series of expectations and concerns among savers, who use fixed deadlinesand financial entities.
This measure, which reduces the monetary policy rate from 40% to 35% nominal annually, has direct implications on the yields of the fixed deadlinesone of the most popular investment options among Argentines.
The BCRA decided to reduce the reference interest rate in a context of declining inflation expectations and an improvement in the liquidity of the financial system. This decision also included the reduction of the active rate, which applies to loans when banks request funds from the BCRA, from 45% to 40%.
The measure seeks to stimulate credit and economic activity, but also has a significant impact on the returns on fixed-term deposits. With the drop in interest rates, banks anticipate a drop of approximately five percentage points in the rates offered for fixed deadlines.
This means that the returns on these placements will range from 35% to 45% nominal annually. This reduction is due to the fact that the monetary policy rate acts as an anchor for the rates of the financial system in general, including those of fixed terms.
Banks have begun to adjust their interest rates in response to the BCRA’s decision. According to sources in the sector, the fixed-term rate will move in a similar proportion to the reduction in the monetary policy rate, that is, around five percentage points.
Competence
However, competition between financial entities to capture and retain deposits could influence the variability of these rates. Since March of this year, the BCRA ordered the deregulation of minimum interest rates, eliminating the minimum rate for fixed deadlines.
This has allowed banks to offer more competitive rates based on their liquidity needs and business strategies. In October, for example, some entities decided to increase the rates of fixed deadlines despite the downward trend in inflation, reaching an average of 37.45% TNA (Annual Nominal Rate), with some offers reaching up to 42%.
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