The Daily Journal.- The Central Bank of Venezuela (BCV) will raise the minimum interest rates that banks must pay on deposits starting Sept. 15, in a move aimed at making savings in bolivars more attractive and strengthening monetary policy transmission.
Under the new rules, all bank deposits will earn interest, including funds held in checking accounts. Starting Tuesday, demand deposits will carry a minimum annual interest rate of 10%, the BCV said.
For savings accounts, the minimum rate will increase from 32% to 42% annually, while the minimum rate for fixed-term deposits will rise from 36% to 46% annually. Financial institutions may offer returns above those levels.
The central bank said the adjustment forms part of its strategy to recalibrate interest rates and aims to gradually encourage individuals and businesses to keep a larger share of their balances in bolivars rather than turn to other alternatives to preserve the value of their funds.
The measure comes as monetary authorities seek to strengthen the role of interest rates as a monetary policy transmission mechanism and as a tool to help stabilize prices.
“The BCV considers interest rates an active monetary policy instrument,” the institution said, adding that it plans further measures in this area to reinforce their role as a strategic channel in the price stabilization process.
The increase represents a 10-percentage-point rise in the minimum rates for savings and fixed-term deposits. For demand deposits, the new policy introduces a minimum annual interest rate of 10% for the first time, according to the announcement.
With information from a press release
