The highest official inflation data produced in April accelerated the Government’s decision to once again raise the interest rate paid by the traditional fixed term so as not to discourage savers from staying in pesos and prevent them from converting to dollars. So now the question is how much a 30-day bank deposit yields with the new profitability, in case of put to invest, for example, $100.000.
It should be remembered that last Friday INDEC announced that the April inflation was 8.4%, a monthly figure that exceeded both the projections of the most pessimistic economists and the ruling party itself. As a result of the high inflationary inertia, it was announced that the Central Bank will raise the interest rate paid by the traditional fixed term by 6 percentage points.
In this way, the nominal annual rate (TNA) from the previous 91% that it determined just at the end of April to the new 97%which applies only to deposits made by natural persons for less than $30 million.
Hence the 30-day profit, which is the minimum placement period established by the financial system, will be 7.97%. An income that is still below the consumer price index (CPI) measured last monthand that it could also be lower than that forecast for May.
It is that in the inflation of the current month could reflect the rise of up to 18% that the value of the dollar had free in April, due to the impact that this reference has on imported products, to which are added the adjustments in tariffs for public services, transport, food and other sensitive items for pockets.
Equally, The official announcement remains to be known of the Central Bank (BCRA), which is expected to take place this Monday.
Inflation of 8.4% in April generated a new interest rate increase for the traditional fixed term: now it pays 97% TNA.
Traditional fixed term: how much do you earn now with $100,000
However, In the event that you want to establish a traditional 30-day fixed term in any bank for a figure of, for example, $100,000, you should know that after that period you will obtain a total capital of $107,973.
That is, after a month of waiting they will earn some “extra” pesos close to $7,973, which represents a monthly profitability of 7.97% (97% TNA). About $500 more than previously offered rate.
As data to take into account, in April, a bank deposit paid an average monthly rate of around 6.6%. In all cases, the income from the traditional fixed term was well below the 8.4% inflation in April.
The figure that shows how the market was misplaced with this higher inflationary inertia expected, is that one should look at the latest Survey of Market Expectations (REM), published at the beginning of May by the Central Bank, based on a survey with 38 economists, which had projected inflation of 7.5 for April %. And that, obviously, was far behind with respect to reality.
Traditional fixed term: rate versus inflation
The fact that now begins to weigh on the saver who bets on the traditional fixed term is what annual inflation can register throughout the year, due to the fact that the effective annual rate (TEA) you pay now is 154%and is equivalent to renewing the deposit plus the interest earned consecutively every 30 days, during a period of a whole year.
An annual income that, for the moment, exceeds the inflation projections made by the REMwhich for all of 2023 was estimated at around 126.5%, and for the next 12 months it is forecast at 146.5%.
The BCRA is expected to raise rates this Monday, therefore, the fixed term will generate more profit.
The problem is that if inflation measured in April is annualized, the effective interest rate on bank placements in a year it would practically liquefy against the prices of the economy.
“Clearly, high inflation impacts traditional fixed terms because annualizing a monthly inflation of 8% becomes a total of 151%”details to iProfessional Claudio CapraruloPrincipal Economist at Analytica Consultores.
