Rates on loans and savings and investment products are likely to remain at current levels for the remainder of 2021. Consequently, the downward trend in inflation at the local level will increase the purchasing power of investors.
In the domestic context, we have seen a significant reduction in year-on-year inflation from 10.48% in May to 7.88% at the end of July 2021.
With these results, annualized inflation continues the process of convergence towards the target range of 4% plus or minus 1% or the Inflation Targeting Scheme implemented by the BCRD in 2012. Likewise, the monthly variation of the consumer price index (CPI) was 0.54% in July 2021, placing cumulative inflation for the first seven months of the year (January-July) at 4.57%.
The weighted average lending and deposit rates of commercial banks have fallen approximately 400 basis points or 4% since their highest level in March of last year, which has created a favorable environment for refinancing or applying for new loans, as long as the borrower has a good credit history.
As for deposit rates, although they have decreased, there are still interesting investment opportunities, especially in fixed-income products, such as long-term government and corporate bonds, as well as mutual funds. On the other hand, short-term investment alternatives can also be evaluated.
It is unlikely that the monetary authority will continue lowering the TPM, and at the pace we are going in terms of economic growth, this is good news for savers and investors.