“Inflationary prospects continue to slide upwards above 60%,” said Delphos Investment consultancy, noting that “on the monetary side, sterilization during the first quarter of this year was carried out by the Treasury rather than the Central Bank. However, However, the BCRA would resume its contractionary role in monetary matters in the coming months, while it would decide on new increases in interest rates so as not to lose track of the inflationary rhythm.
“The low expectations of compliance with the agreement with the IMF in fiscal and monetary matters – aggravated by the war in Europe -, the high inflation at the starting point, the need to recompose some relative prices after the failure of nominal ‘electoral’ anchors ‘, are some of the elements that suggest that, once again, official inflation guidelines will be trumped by reality“, sentenced Daniel Artana, from FIEL.
“The possibility of gradually complying with the guidelines of the plan with the IMF of financial balance could give rise to greater stability and chances of recovering the value of the suffered local papers,” said VatNet research, although it pointed out that “however, the deep-seated political disputes and social factors add another factor of tension in the event of unexpected developments, suggesting the convenience of a predominantly conservative strategy”.
“Argentina has tried until now with magic recipes: fixed dollar, interest rates, maximum prices or care. Always partial visions of reality, instead of having a comprehensive and convergent anti-inflationary program: all the variables -fiscal, monetary, foreign exchange, income- must point to a descending inflation that anchors expectations, which now move like a ship aimlessly, without a correct path”, added the former president of the Central Bank in radio statements (BCRA) Martin Redrado.
On the other hand, the market is already discounting a rate hike by the Central Bank: “operators are paying attention to the greater pace that the central bank (BCRA) has been deploying in the ‘crawling-peg’, and as a correlate of all this a possible new rise in the rate,” said Gustavo Ber, from Estudio Ber.
“The monetary authority (BCRA) maintains its buying stance in the single, free-exchange market -MULC-, but with an increasingly limited margin of manoeuvre,” Portfolio Personal Inversiones estimated.
“The first rounds of April are being marked by a lower liquidation of agriculture. The agro-export sector has been liquidating at an average daily rate of 138 million dollars, falling back with respect to the daily average of March by 142 million,” he explained.
In relation to economic growth, Ecolatina stated: “Although the economy will return to its maximum levels next year, this does not indicate that the ground lost in recent years has already been recovered: on the one hand, consumption will be far from being what it was then, due to a real wage that will be far from being equal to its level in 2017. On the other hand, it will occur in a context of poverty more than 10 pp higher Both symptoms reflect the main problem: the population will have grown 6% in the period, so the same cake will have to be distributed among more people”.
dollarization
In the midst of the discussion about dollarization that arose after a project by a PRO deputy, economists dismiss this possibility. “When they talk about magical programs that solve inflation overnight, such as dollarization, we must take into account what effects this has on people’s income. At what exchange rate would we dollarize? The impoverishment of our income is the most important discussion, beyond a magical solution that we know does not exist in the economy,” economist Candelaria Botto added in radio statements.
“The urgency to achieve results in the short term tends to underestimate the costs in the medium term and overestimate the benefits in the short term. But even so, the current restrictions of the ‘start up’ would make it very difficult to implement dollarization in the short term by the costs that this implies”, said Gustavo Reyes, from IERAL of the Mediterranean Foundation.
Source: Ambito
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