The Board of the BCRA has adopted several measures aimed at clarifying and streamlining the way of defining the monetary policy rate.
From December 19, 2023, the monetary policy interest rate will agree with the overnight reverse repo rate, which was set at 100% APR on December 13, 2023.
The Board decided against continuing to resort to liquidity bills (LELIQs) auctions to rationalize the liquidity management scheme. Instead, the BCRA will draw on reverse repo transactions as an instrument for absorbing monetary surpluses.
By drawing on a single instrument and establishing the policy rate as the only benchmark interest rate, the BCRA seeks to give an unmistakable signal of the monetary policy to be followed, and to strengthen the transmission of the monetary policy interest rate to the remaining economy's interest rates.
Against a backdrop of significant liquidity surplus and high inflation, the Board opted for keeping the minimum interest rate on time deposits at 110% APR as set out in Communication A7922. Moving in the same direction, the Board deems it fit that the banking system continues offering UVA time deposits to the public, and that the early-payment minimum rate on these deposits be lifted in an effort to ensure predictability on their availability.
As for the liquidity injection, the BCRA may, were appropriate, continue conducting repos and offering put options on Treasury’s instruments. In addition, as under Communication A7921, the Board established that the securities that may be sold to the BCRA under a put option will be excluded for calculating the limit of the lending to the financial public sector.
December 18, 2023