He The Central Bank again lowered the reference interest rate from 70 to 60 percent annually. The entity continues with its plan to liquidate assets in pesos such as fixed terms, which from now on would begin to pay close to 4 percent monthly. These are investments that offer a return that is increasingly lower than inflation and directly impact the savings in local currency of both people and companies. The liquefaction of the stock of pesos is one of the main objectives of the economic team in its intention to open exchange controls and launch a currency competition scheme. The consequences of this policy are paid by savers.
The monetary authority made it clear that the decision to lower the interest rate was made after the evolution of inflation data for April, which for some analysts would be around 10 percent or less. However, the main explanation is the intention to reduce the amount of pesos that exist in the domestic market (measured in real terms).
This Thursday’s announcement is the fourth reduction of the reference rate carried out by the monetary authority since Milei took office. The previous one had occurred just two weeks ago, which shows the government’s marked intention to accelerate this process.
With the decrease in reference rates, Banks have free rein to continue compressing the return they pay for fixed terms that place retail and wholesale investors. The returns on fixed terms that expire starting tomorrow may be renewed at an interest rate of around 4 percent, which is between two and three times lower than monthly inflation.
For its part, the contraction of the reference rate generates impact on the monetary liabilities of the Central Bank. This is because starting this Friday, passive passes will also have a lower return. However, despite the fact that monetary liabilities have been sharply reduced in real terms, some analysts assure that the clean-up of the monetary authority’s accounts is artificial. This is because measured in dollar terms, the level of monetary liabilities increased sharply. This is a situation caused by the very strong exchange rate appreciation in recent months.
The accounting creativity that the government uses to show improvements in macroeconomic variables is not only observed at the level of the stock of pesos of the economy, but also in the net international reserves, which were inflated in recent months by stepping on the payment of imports and issuing bonds for debt with importers. Precisely, on this last point, the monetary authority reported that it made a new award this Thursday equivalent to 113 million dollars of Bopreal. At the same time, he assured that he is evaluating opening the subscription of this title for the transfer of profits.
In detail, the monetary authority said that in the last placement of Bopreal received orders from 147 companies and awarded all applications. In the accumulated placements of series 3 of this title, the equivalent of 1,197 million dollars have been awarded. These bonds are enabled to be transferred and traded in the secondary market. They pay a dollar rate of 3 percent nominal and amortize in 3 quarterly installments, from November 2025 to May 2026.
“We are evaluating the possibility of opening subscription in upcoming tenders for companies that require distributing profits and dividends to non-resident shareholders, concept that has required prior approval from the Central Bank for access to the Free Exchange Market since September 2019,” the monetary authority announced. The next auction is expected to take place the week of May 6.
