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BCRP on the withdrawal of 4 UITs from the AFPs: “It would not have a greater impact on inflation”

BCRP on the withdrawal of 4 UITs from the AFPs: “It would not have a greater impact on inflation”

The issuing entity anticipates that only “a very small part” of the funds released will go to consumption, although it would push up long-term interest rates.

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Following the approval of the withdrawal of up to 4 UIT from AFP funds in Congress – whose law is already in the hands of the Executive Branch – the Central Reserve Bank of Peru (BCRP) indicates that inflation will not be affected.

“A withdrawal of up to 34,000 million soles is estimated, according to the SBS. It is estimated that a very small part will go to consumption. “Some surveys reveal that most of the resources would go to savings or paying debts, so it would not have a major impact on inflation.”commented Carlos Montoro, BCRP Monetary Policy Manager, during the presentation of the April Monetary Program.

However, Montoro emphasized that there will be consequences in the financial markets after the release of pension savings, since long-term interest rates will rise.

Furthermore, he maintained that The BCRP rejects withdrawals from AFP pension funds because they endanger the old age of Peruvians; and in macroeconomic terms it will make private administrators liquidate their portfolios to assume payments to citizens.

“They will sell their investments both abroad and domestic and government bonds. This generates, on the one hand, pressures in the local financial markets and, on the other hand, it also decreases liquidity in the local market, which also makes financing difficult for long term of companies. It is a measure that will have an effect on the bond markets,” he added.

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Trained at the Jaime Bausate y Meza University. In constant learning. Economics is the branch of journalism closest to the people and my duty is to be a bridge to information.

Source: Larepublica

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