The good news: the banks welcomed the reduction in reserve requirements and the establishment of the “rate corridor” announced by the Central Bank. They believe it will lower market volatility and help credit. The bad news: it still takes a long time for interest rates to drop. Several months, at least, until the delinquency rates are closer to a normal situation.
The “rate corridor” means that the BCRA undertakes to take – at 20% – the cash left over from the banks at the end of each day, while it will lend – at 25% – to those that are short to cover their liquidity needs. In this way, limits are placed on sudden fluctuations in short-term interest.
As always, the market was divided into two factions: everyone believes that the measures are positive, but while the government’s defenders believe that they are the adaptation to a change in the political scenario, critics affirm that the government is tacitly acknowledging errors committed in recent months.
The staunchest criticisms are those linked to the disarmament of the Liquidity Fiscal Letters (LEFIs), that left the market without a reference instrument and triggered extreme volatility in interbank rates and very short-term financing for companies.
The government, to this day, attributes this volatility to a political reason: the abrupt collapse in the public’s demand for pesos, which led half of the monetary base to take refuge in the dollar, within the framework of a “destabilizing attack” perpetrated by the opposition by voting for laws without fiscal support.
Was the “kuka risk” exaggerated?
However, on the other side they maintain that the “kuka risk” was only a marginal factor, and that what caused the financial turbulence was a series of unfortunate measures, such as the increase in reserves to 53% and, to make matters worse, with the obligation to maintain a daily minimum reserve requirements for banks – previously it was recorded on a monthly basis -. This rates skyrocketedwith the consequent impact on the cost of credit for the productive sector, which had a virtual paralysis in the third quarter of last year.
To put it into numbers, a report from the Mega QM fund manager compares the first quarter of last year – when the interest rate dispersion was 2.5% – with the pre-election period, when that dispersion rose to 25.5%.
“After the electoral process and with less pressure on the exchange rate, the volatility of the interest rate not only remained, it even accelerated. Almost 3 out of every 10 days had movements greater than 25% of the interest rate level”observe the report.
The consequence of this situation is the inevitable widening in the spread -in financial jargon, the way in which the distance between active and passive rates-, because banks need a higher level of coverage against the risk of volatility.
The “fault” of default
But, beyond the political controversy, what we have to do now is project what will happen to interest ratesnow that the BCRA has assumed a more active role, effectively reopening a deposit window liquidity assistance for the banks.
In the financial system, they attribute more importance to this measure than any other that the Central Bank may announce, because they maintain that nothing damages the market more than volatility.
That was, in fact, a long-standing claim. “The resulting uncertainty not only hinders strategic decision-making, but also alters financial operations by force a precautionary shortening of deadlines of any financial decision,” states a report from Mediterranean Foundationwhich warns of “dysfunctional” effects on the system.
The consequence, now, is that there will be greater predictability. Does that mean that lending rates – those charged by banks for lending – will drop from their current exorbitant levels? The answer is a resounding no.
“It’s going to happen little by little, it’s not like they’re going to cut rates in half all of a sudden. It’s something gradual. Among other things, because these levels of delinquency are something that banks are giving birth to. “It is a loss with a very important impact.”says an executive from one of the three largest private banks.
In the segment of loans to families, this level of payment irregularity reached 11%, according to BCRA information. But that is the data for the banking sector, where there are stricter requirements regarding the debtor’s income. On the other hand, in the non-banking sector – including electronic wallets – delinquency jumped up to 28%.
In fact, what analysts were contemplating with concern was how, by increasing the level of arrears, The banks’ reaction was to raise lending rates, thereby compensating good payers with a “punishment” to mitigate the loss caused by non-payment.
The warning that economists made was that this rate policy would cause an “expulsion effect” in which the best payers leave the system and the banks keep the worst in their portfolios. In other words, a risk of acceleration in the phenomenon of default.
Credit forecast: cold
With the new measures, the banks believe that the conditions are in place for normalization. But they warn that the process should not be rushed. In recent days there were versions that the BCRA could lower the “floor” of the rate corridor, piercing the current level of 20%.
The executives consulted said that if this happened at this time, the objective of a faster reduction in the lending rate could be achieved, but that there would be side effectssuch as a faster reduction in the passive rate – the one paid to depositors -. In short, instead of shrinking, the spread would widen, and there would be an extra incentive for savers to look longingly at the dollar.
How bad is the credit situation? The BCRA statistics show a cooling panorama. With the exception of UVA mortgages and credit cards, the rest of the lines have seen their volume fall in real terms.
“The worst performance was for current account advanceswhose real stock with seasonal adjustment showed a decrease of 4% monthly, even though it was one of the lines that showed the lowest rate in March. “Poor performance is a constant at the start of 2026 and has already accumulated a drop of almost 8% compared to December 2025.”points out the Outlier consulting firm.
This low dynamism of credit to companies is what leads several analysts to affirm that, more than the level of the rate, what is having an impact is the stagnation of some sectors of the economy and the fall in the income of the salaried population.
A report is eloquent on this point. of the economist Lorenzo Sigaut Gravina Compare the current situation with the management of Mauricio Macriwhen a credit boom had also been generated. And the numbers are eloquent: interest payments represent an unprecedented 26.3% of the family budget – it tripled in a year and a half. While in 2018 that ratio did not reach 20%. Regarding delinquency, the current level is double that recorded in the Macri period.
The BCRA opens, Caputo closes
Speaking in plain English, the rate situation is that savers who take money to banks to place them in fixed term they receive, in the best of cases, an annual effective rate of 25%. But if they want apply for a loan at a fixed rate, they will find a nominal interest of 120% which, with the capitalization of interest plus administrative charges, reaches a total financial cost of 300% annually.
“Obviously, as there is more liquidity due to the Central’s measures, that will make rates go down. But until they reach the level required for credit to grow strongly again, it will take a while, I would say months. Because the cut has to be significant for the effect to be noticeable.”predicts the banking executive consulted.
This caution also seems justified by the attitude that Toto Caputo has demonstrated in the latest Treasury tenders. Far from confirming itself with “rolling up” debt maturities, it placed excess bonds to “aspirate” pesos from the market.
It is something that makes it clear that, although the minister says that the demand for money is recovering, he does not want to run the risk of excess liquidity playing against him just when he is in full acceleration of inflation.
In short, while the BCRA opens the peso tap, Caputo turns on the vacuum cleaner and neutralizes the expansive effect. And this means that those most eager to see a drop in lending rates can settle in to wait.
