At the end of 2020, interest rates on bank deposits remained at very low levels, in certain cases below the inflation rate, and further still from the annualized rate of depreciation of the peso in relation to the dollar. If these rates of inflation and depreciation persist this year, it is to be expected that deposit rates should increase. Given the connection between deposit and loan rates, the objective of achieving the recovery of economic activities has made this increase inconvenient until now. However, the need for depositors to receive a real remuneration compatible with that of other possible placements will weigh on the next monetary policy decisions regarding the reference rates.
It is well known that the speed of adjustment of lending rates, those charged for loans, is usually greater than that of deposit rates, which leads to periods in which banks’ intermediation margin temporarily expands. From the point of view of credit users, the trajectory of lending rates affects their costs and is more relevant than that of liabilities.
In some countries where lending rates adjusted more rapidly to the levels of inflation and depreciation of their currencies, there have been complaints and proposals for caps on them. An example of this is Peru, where a bill for that purpose is being debated.
The promoters of this initiative seem to believe that financing can be made cheaper by administrative provision, which is why they intend for the Peruvian central bank to set maximum rates every six months. They encourage the cost of money to fall for the neediest sectors, but as with price controls generally, the result would be that those with weaker credit ratings are excluded from loans.
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