Among the various signs indicating that the price of the peso is lower and lower is the new increase in interest rates, for which bank deposits are paid. This is the saver who converts $100,000 to a . keeps in In the traditional 30-day fixed period, you will earn the equivalent of one kilo of yerba mate as an “extra” for this increase in yieldOr a pound of mozzarella cheese, or two big brands of deodorant.
A trait that shows how the economy lost context in prices and how investing in pesos increases their rents. slow rate of inflation,
In this case, the Central Bank, at the end of last July, increased the interest rate paid by the formation of a fixed term of about 8 percentage points. In other words, it went up past 53%. Actual 61% annually.
Beyond what appears to be an attractive level of growth for returns from these appointments, the facts show that Concrete gains do not allow for Argentina to significantly improve savings potential,
This is the monthly that was 4.4% earlier and now, with the increase, Provides 5.08%. a level that is still below inflation It was around 7.6% in July. And it is also lagging behind the economy’s price levels in May (5.1%) and June (5.3%).
Fixed term: an “extra” who barely buys a kilo of yerba
This lesser incidence of increase in interest rates has been observed for savers for a fixed period, for example, a Traditional placement in 30 days for an amount of $100,000.
Inflation proceeds at a higher rate than the increase in interest rates on fixed terms, which is not enough for much.
before With the said initial capital increase, $104,417 was obtained at the end of July. $4,417, or 4.41% return per month,
Now, with the new increase in earnings for deposits set up by BCRA, a traditional fixed term pays 5.08% per month. As a result, an amount of $105,083 is earned today, which represents additional money over $5,083 invested.
In short, today you get a “Extra” of $666 in respect of interest paid by the fixed term prior to the last rate increase from a few weeks ago.
A penny that would barely allow you to buy a pack of yerba mate, or 500 grams of mozzarella cheese, or 2 AX brand deodorants. or, 3 bottles of flavored water of 2 liters; o 3 premium alphajors, such as Havana or Kachafaz, Which costs around $220 per unit.
Fixed term loss with inflation
The problem with the performance of certain conditions, as can be seen, is their increase The “needle” of earning doesn’t move for the savers, is that it follows inflation.
according to the last Market Expectations Survey (REM)Among various analysts conducted by the Central Bank, inflation in July stood at 7.5%. This level is much higher than the 5.08% per month that a fixed term offers today.
The recent increase in fixed-term rates means that savers can barely afford a package of 1 kilo yerba for as little as an additional $100,000 per package.
According to the projections reflected in the REM, Fixed terms will also be lower than prices in the coming months of the economy, as inflation will be 6% in August and will reach 5.5% in September.
“The recent increase in the fixed deposit interest rate to 61% means that the remuneration received by savers is 5.1% per month (TEA 81.3%). These values are below the level of inflation expected today, but they are less than 800 basic points negative compared to before the rise”, analyzes iProfesional Sebastian Menescaldi, Economist and Associate Director of Echo Go.
Furthermore, it experts say that with a depreciation forecast of around 6% dollars in the month, “These securities were delayed and do not represent a profit opportunity in relation to the dollar, nor to price development.”
For this reason, Menescaldi believes that “it is possible” that at the next meeting of the BCRA Policy Committee, which coincides with the publication of CPI data for July next Thursday, “A new adjustment of interest rate has been entered”.
Rate hikes not enough to entice savers
In short, for George HillIdesa Economists, Raises Central Bank Interest Rates Fixed terms because they are located at a low level with respect to inflation, “So it’s about avoiding putting people at risk of not renewing their placements.”
Similarly, it makes it clear that Fixed terms are for “institutional investors”, such as companies or other firms that require liquidity. And for people, it is yet to move to a more profitable instrument, such as mutual funds or bonds.”
An increase in prices to such a high level means that despite the rise in rates, the income from the fixed terms lags behind them.
in the same vein, Isaiah MarinickAn economist at Ecoviews tells iProfesional that,While the rate hike is “going in the right direction” with respect to inflation projections for August, it is still insufficient for now.
And he says: “Considering a duration of more than 3 monthsIf the fixed term is renewed every month, you can get a Yield of 15.8%, which is still below our expectation for inflation in the coming months, In that sense, I think it is still convenient to opt for the UVA fixed term, but it does mean the risk of silver freezing for that time.
on behalf ofAndrew SalinasEconomists, educators and researchers from the University of La Matanza believe that Interest rate hike is “a useful tool in the fight against inflation”In fact, many central banks are currently raising them to counter inflation not seen in more than several decades.”
Although he clarifies that The effectiveness of the measure will depend on a “series of circumstantial factors”.That includes the level of uncertainty in the economy, confidence in institutions and market and investor expectations.”
Thus, Salinas concluded: “The problem is that even with positive real rates, there is more fear and uncertainty in both the people and the market that inflation will be higher. Hence, the government has not been able to meet the maturities.”
Meanwhile, the economist Natalia Motilo, clarifies that the increase in interest rates “acts” because these instruments came too late in relation to the acceleration of inflation and the dollar’s boom in recent weeks. However, he clarified that “with a broken central bank, I see little chance that there will be a significant slowdown in inflation or stabilization of the dollar. For this reason, It is advisable not to stay in pesos”.