New BCRA bid to lower rates

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In another attempt to reduce interest rates, Argentine Central Bank (BCRA, in its Spanish acronym) will apply a new measure today, trying to increase liquidity for banks. So, the monetary authority has doubled the available amount through active repos, placing it at ARG$2 billions (ARG$1 billion before), and it has trimmed rates charged to banks for these loans a quarter of point.

Due to great volatility during the last twelve months, throughout which call money went as far as to touch 16.4 per cent annual, the entity headed by Martín Redrado decided to put this measure into practice, though there are doubts whether it may have an impact on interest rates of credits granted to the general public. "Credit rates may fall a little in the short-term, but all the same we expect them to increase after October presidential elections," Miguel Kiguel from Econviews expressed.

With rate reduction for active repos, the new scale as of today Monday is 10.25 per cent in 7 days; 10.50 per cent in 14 days; and 10.75 per cent in 30 days.

Although during the last weeks request of fresh funds by financial entities was almost null, BCRA sources insist that this measure seeks to give a sign that they have the necessary resources to ease any situation of market illiquidity.

As Kiguel signals, "public banks are the ones using repos, since the rest doesn't see them as something natural, because these transactions may create the feeling that the entity is not doing well."

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