The Central Bank raised the interest rate paid by the traditional fixed term, but the difference obtained with this increase is barely one alfajor
By Mariano Jaimovich
20/04/2023 – 20,50hs
The Central Bank has just announced a new rise in the interest paid by the traditional fixed term, which places the nominal annual rate (TNA) at 81%, which seeks to seduce savers in the face of escalating inflation. The problem is that the increase made now of 3 percentage points represents that in a 30-day placement of $100,000, we now obtain an “extra” profit that is equivalent to the value of just one alfajorcompared to what was achieved one day before the official measure.
That is, in concrete numbers, the new rate hike does not move the ammeter of savers who were already making a traditional fixed term.
Even now the monthly rent becomes 6.66%, a percentage that continues to lose compared to the inflation registered last March of 7.7%. And it would also be below the measure in April, since according to the latest economist projections, inertia indicates that the consumer price index (CPI) will be above 7% per month.
In concrete figures, if a traditional 30-day fixed term is placed for an amount of $100,000, with the new interest rate a total of $106,657 will now be earned. Therefore, after a month of waiting, the “extra” pesos obtained through this tool will be $6,657which represents 81% TNA.
New fixed term rate: extra profit from “un alfajor”
In conclusion, the monthly income obtained in a traditional fixed term with the aforementioned initial capital now exceeds by just a few $250 to what was earned with the same placement up to one day before the announcement of the interest rate rise, since 6.41% was paid. This was equivalent to a rent of $6,410 per month and is now $6,657
It is amount “extra“which now offers a bank deposit represents a figure similar to the market value of a medium quality alfajor, that is, it is not even enough to buy a Premium one. Nor is it useful to buy, for example, a fruity yogurt of certain brands or a 2-liter soda.
The “extra” money that a traditional fixed term provides after the interest rate rise is not even enough to buy a Premium alfajor.
Beyond the interest rate hike announced on Thursday, the traditional fixed term today “loses” against monthly inflation, which is around 7%.
On the other hand, the escalation that the free dollar price throughout aprilis also discouraging deposits in pesos as an investment, because the informal US bill is increasing 9.6% throughout April, since it climbed from $394 to the current $432.
Point in favor of the traditional fixed term
In favor of these bank placements, the effective annual rate (TEA) is considered, which is 119.4%, and which means renewing the initial amount deposited plus the total interest earned every 30 days, consecutively for 12 months.. Thus, the theoretical monthly rate obtained with this investment is 9.81%, a level that exceeds the inflation expected in that period.
In fact, the effective rate of 119.4% per year exceeds economists’ forecasts for the consumer price index (CPI), because various experts today are projecting an increase of 115%. But, of course, this income is only achieved in a long term of a whole year.
For the time being, the BCRA’s justification for its decision to adjust the interest rate by 300 basis points is that in March the variation in the CPI General Level of 7.7% “was driven by significant accelerations in the Seasonal and Regulated categories, showing a smaller increase in the Core category (7.2%) and in the Core category excluding meat and derivatives (6.5%).”
In this regard, the monetary entity concluded that “will continue to monitor the evolution of the general level of pricesthe dynamics of the exchange market and of the monetary aggregates for the purpose of calibrating its rate policy”.
