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Argentina's Central Bank Holds Interest Rate Steady as New President Takes Office

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BNN Correspondents
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Argentina's Central Bank Holds Interest Rate Steady as New President Takes Office

Argentina's Central Bank (BCRA) has held steady its interest rate for fixed-term deposits at 11%, a strategy aimed at enticing savers to retain their pesos in fixed-term deposits and relieve pressure on the unofficial dollar market. This interest rate is projected to slightly surpass the inflation rate, which has been displaying signs of slowing down in recent weeks.

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BCRA's Previous Rate Hike

Prior to this, the BCRA had instituted a rate hike of 15 percentage points, resulting in an Annual Nominal Rate (TNA) of 133%, and an Effective Annual Rate (TEA) of 253%, revised last October 12. At these prevailing interest rates, a deposit of 600,000 pesos would yield a return of 65,589 pesos, equating to an 11% return on the initial investment.

Home Banking: Preferred Channel for Fixed-Term Deposit

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Most banks offer multiple channels for customers to establish a fixed-term deposit, with Home Banking emerging as the most favored method in the present day. The procedure entails logging into Home Banking, electing 'Inversions', then 'Fixed Term', and stipulating the investment amount, the investment duration, and the kind of fixed-term deposit. This is followed by the account details and confirmation, with advisement to opt for manual renewal rather than automatic.

Political Impact on Argentina's Economy

Argentina's newly elected far-right President, Javier Milei, is a proponent of anarcho-capitalism and the dismantlement of the nation's central bank and currency. He aspires to substitute the local currency peso with the US dollar and terminate Argentina's central bank. Milei's ideologies have impacted Argentina's inflation crisis, with the Argentine peso suffering over 140% annual inflation in the previous year. The dollarization of the Argentine economy has been attempted before and has been unsuccessful. The election of Milei signifies a populist reaction to the economic and social conditions in Argentina, with high levels of economic insecurity and poverty.

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