Interest rates

One by one the new interest rates that fixed terms will pay from Monday

In response to data inflation March, which reached 6.7% and was the highest in the last 20 years, the Central Bank (BCRA) decided to raise interest rates of the financial system for the fourth time this year. Among them are those who pay fixed installments.

Con nominal returns of 47% or less, the effective annual rates – which are those that are compared to inflation – now reach 58.7%. According to INDEC, prices have increased by 55.1% over the past 12 months. Thus, new peso yields would exceed past inflation, even if they do not ensure profits in the face of future escalationsince inflation expectations for this year are close to 60%.

I also read: Bread, milk, eggs and chicken: the foods whose price rose the most in March

Although they do not ensure a positive return, increases in the minimum rates for fixed terms boost locations banks in this traditional savings instrument.

Prices for traditional 30-day contracts

According to the new regulations, from next Monday, the yields are increased by 2.5 percentage points and they are the following:

  • The bone deposits up to $10 million carried out by human persons in banks will pay, at a minimum, a nominal annual rate of 46%, which means an effective annual return of 57.1%.
  • the rest of deposits -which includes all those made by companies and those made by individuals for amounts greater than 10 million dollars- will have a minimum return of 44% nominal, which translates into 54.1% effective.
Faced with investments triggered by inflation, the Central Bank decided to increase the rate of investments in pesos. (Photo: Adobe Stock).
Bonaventure Mariano

How much will UVA fixed terms pay?

In the case of fixed durations that adjust to UVA, there have been changes for the version cancellable. It is a type of deposit which, although it is 90 days, can be withdraw from the first month.

I also read: Faced with unabated inflation, UVA fixed durations increased by more than 30% in the first quarter

Savers who use this option pre-cancel lose UVA adjustment and get a fixed rate. Until Wednesday, this yield was 38.5%, but now the BCRA has increased it to 41%.

How the new rates compare to inflation

Except in the case of fixed UVA paymentswho always offer a price that matches or slightly exceeds price adjustmenttraditional peso deposits will continue to earn negative monthly returns relative to inflation.

I also read: What is the reference rate and what is its impact on the economy?

From Monday, the highest rate that banks will offer will be 46% nominal annual. This is equivalent to:

  • And 3.8% monthly returnwhich would be lower than the inflation projected by the private sector for April (4.3%) and would barely match the figure expected for May and June, according to the latest Market Expectations (REM) survey.
  • the effective monthly rateon the contrary, would be around 4.75% and would exceed the monthly inflation estimated for the coming months.
  • A effective annual rate of 57.1% which loses against the price increase expected for the whole of 2022, which stands at 59.2%.

The rest of the depositors will get even lower returns for saving in pesos, since a nominal annual rate of 44% translates into monthly interest of 3.7% and an effective annual rate of 54.1%.

Subsidized loans, more expensive

In compensation for the increase in the rates paid to savers and investors, the BCRA has also defined a cost increase of some of subsidized loans to mipymes.

The decision concerns discourage arbitrage between rates and currencies. With very low rates, for example, there is more incentive to borrow in pesos and demand dollars to import, or to delay the liquidation of foreign currencies in the official market.

From next week, financing rate serene:

  • When it comes to financing working capital there rebate check deferred payment or bills mipyme electronic loans, the rate went from 43% to 45.5% annual nominal.
  • Businesses of any size whose primary business is lending health-related services or those that allocate funds to acquire machinery and equipment produced by Argentinian MSMEs.
  • For projects of productive investments made by MSMEscost continues at 35% annual nominal.