CB complies with goals against inflation

Argentine Central Bank continues complying with goals to keep M2 aggregate value stable (circulating money in the hands of people, demand deposits and saving accounts), by settling it at ARG$117.75 billions. During November, a new reduction was posted, which has already accumulated an 8-per cent decline with respect to December 2005.

Moreover, the monetary authority continued with its reserve accumulation policy, raising the stock at the end of November to $30.32 billions (its historical maximum). In order to ensure a balance, monetary expansion (due to foreign-currency purchase) was sterilized with LEBAC and NOBAC (Central Bank's Bills of Exchange and Securities) placement for $1.46 billions. Public sector caused a monetary contraction for ARG$490 millions. With respect to time deposits, they kept on growing and posted an increase of ARG$930 millions, boosted mainly by private sector. Interannual growth of time deposits continued speeding up and, in November, it touched 31 per cent.

Private sector loans increased ARG$2.3 billions in October (3.3 per cent). In interannual terms, they accumulate a nominal 43-per cent increase and a real 30-per cent rise. Expansion keeps on being widespread in all lines. However, acceleration of real warranty financings is remarkable, motorized by mortgage loans' dynamism.

Repos

On November 2, Central Bank increased benchmark interest rates by 0.25 per cent for all repos, both passive and active. In this way, passive repos moved to 5.75 per cent and 6.25 per cent for one- and seven-day terms. Active repos settled at 8.25 per cent. For their part, LEBAC hurdle interest rates decreased 0.2 per cent. At the end of November, NOBAC hurdle rates (adjustable by private banks' BADLAR rate) settled at 10.23 per cent and at 11.57 per cent for one and two terms, respectively.

Retail inflation hit 0.7 per cent monthly, lower than the figure posted on the same month of 2005 (1.2 per cent) and than the expected one by market. Most of rise resulted as a consequence of food and beverage hike.