The Central Bank announced measures to try to save savers in pesos and not go to the dollar

In response to the change in the political and financial scenario that became more unpredictable than usual, and that caused a strong outflow of deposits in dollars and liquidation of the impositions in pesos in terms of dollars, the Monetary Policy Committee (Copom) of the Central Bank of the Argentine Republic, decided to adapt the parameters of its monetary scheme to recent developments in the economy.

"In line with BCRA's demand for money projections, the new goals contemplate a growth of the monetary base of 2.5% monthly in September and October. In the case of September, the variation is considered with respect to the bimonthly goal of July-August, leaving the monetary base goal for the current month at $ 1,377 billion pesos. These goals will be adjusted according to the net exchange operations carried out by the BCRA from the date of publication of this statement. "

"The announced monetary-based goals are established in a context in which money demand projections may lose precision. Consequently, to guarantee the contractual nature of monetary policy, Copom considers it necessary to increase the lower limit for the rate of interest of the Liquidity Letters (Leliq) from the current 58% annual to 78% annual in September, during the inflationary peak. For October, this limit is set at 68% per year, in a manner consistent with market projections regarding a slowdown in the inflation rate, "said the monetary authority. On Wednesday, that rate averaged 83,205 per year.

The measure responds to the concern in the monetary entity about the "rise in country risk, the difficulties in refinancing the Treasury Bills and the significant depreciation of the peso", which led the Ministry of Finance and the BCRA to take action at the beginning of September aimed at "defending monetary and financial stability", so that "the economy can transit the current uncertainty in the best possible way," the Copom statement completes.

IMF sources highlighted minutes after learning Copom's decision: "We hope that meetings with the Argentine authorities in the coming weeks will be an opportunity for dialogue (on these and other issues). The IMF staff remains committed to Argentina and continues to work with the authorities to address the difficult situation facing the country.".

Technically, it is highlighted: "The acceleration of inflation produced by the depreciation of the peso implies a reduction in the real supply of money, while the new exchange rate regime allows to project a real demand for sustained money. In order to avoid an excessive monetary contraction , in a context that already had an adjusted liquidity, it is necessary to update the originally established monetary base goals ".

Thus, Central technicians aim to generate positive expectations for savers so that they remain in pesos, and do not go to the dollar, because he trusts that the new floor level of interest rates for fixed-term loans will exceed not only inflation, but also the devaluation of the peso.

The counterpart is that such a floor of the cost of money, which goes up to a floor close to 100% per year for those who need credit for working capital, such as In the case of SMEs, it will contribute to lengthen the recessive scenario.

The short-term monetary policy resolutions were adopted with the "unanimous approval of the people who make up Copom: the president, Guido Sandleris, the vice president, Gustavo Cañonero, the second vice president, Verónica Rappoport, Enrique Szewach, director appointed by the Board of Directors of the Central Bank, and Mauro Alessandro, deputy general manager of economic research. "