Rate Hike With Little Conviction

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Rate Hike With Little Conviction

Third week
March 2023

The Central Bank raised the monetary policy rate from 75 to 78%, that is, from 107.35% to 113.31% in terms of the effective rate, which is the one that matters. The minimum rates that banks must pay to firms and households also rose 3 percentage points. It is 69.5% for firms and 78% for people with up to 10 million pesos. However, the overnight repo rates were not touched, in our opinion the most efficient for monetary policy, which remained at 72%, and the concessional loan rates for product lines and check discounts were not changed, as well as the credit card rate, although few people qualify for the 77% rate anymore. In other words, the recessive effect of raising interest rates will be very marginal.