So far in 2022, the Central Bank has implemented rate hikes of 450 basis points. The last one was in mid-February, and reached 250 basis points, after the evolution of prices during January was known.
Various analysts consulted by Ámbito considered that, in order to sustain the promise that interest rates will remain in positive territory, they must modify yields upwards. Santiago López Alfaro, president and partner of Patente de Valores SA ALyC, told this newspaper that “it should go up 200 more.” “According to the optimistic expectations of the REM, inflation in 2022 is going to be 55%. The effective annual rate (TEA) of retail fixed terms is 50.4% and of the BADLAR is 48%. That means that, if you take the REM, the current rate is between 5 and 7 points lower. But if an inflation of 58% for 2022 is taken as an estimate, the interest rate is between 8 and 10 points below”, calculated the economist.
Federico Furiase, director of Anker and professor at UTDT, considered that “with inflation at 4.7% per month in February and the expectation of sharp inflation in March, it is key that the BCRA raise the monetary policy rate.” “Today the TNA is at 42.5%, consistent with an effective monthly rate of 3.5%,” he calculates. The rate hike, says Furiase, is a signal “to mark the field in the field of expectations and to limit the potential pressure on financial exchange rates.” “Probably the BCRA will not accelerate the crawling of the official exchange rate on a par with the acceleration of inflation in these months, so as not to add fuel to the inflationary inertia, with which we can have a greater real appreciation of the official exchange rate in the short term, and then on that side a rate hike by the BCRA is also justified”, estimates the specialist. “The Central Bank should give a signal that brings it from the current 42.5% TNA to the 45% zone,” he calculated.
The effectiveness of an eventual rise in the interest rate in the fight against inflation is one of the points discussed by Alejandro Kowalczuk, director of Argenfunds. “The effectiveness of a rate hike in Argentina to contain inflation is very relative. I think it serves more to contain portfolio dollarization, betting on carry-trade, than to contain inflation,” the economist told this newspaper. “If the rate is raised, I would associate it more with the search to avoid an exchange rate event than with seeking to curb inflation,” he analyzed.
Source: Ambito
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