Pros and cons of the rates hike

The Central Bank surprised the market with a very strong hike of interest rates that comes two weeks after the previous rise. Now the monetary policy rate is 69.5%, that is, the APR of the 28-day Leliq. The overnight reverse repo rate, the most similar to that of all the world's central banks, is now 64%. Since July 27, the Leliqs rate went from 52 to 69.5% and the repo rate from 46.5 to 64%. In any case, the rates that must be taken into account are the effective ones, which become 89.5% for repos and almost 97% for Leliqs. These are rates that are either no longer negative in real terms or nearly neutral. In last week’s bond auction, the Treasury also raised the rate. It was a successful auction with positive financing (new debt, without euphemisms) where the Treasury paid an effective rate of 98.05% for 106-day bonds. A few days ago it had paid 90% for 94-day bonds. The minimum rates for fixed term deposits also had a strong rise.