The IMF said that further tightening of its monetary policies “will be key” to anchor inflation expectations, the Europa Press agency reported.
In this direction, it should strengthen the credibility of the monetary authority and control price increases in a lasting manner.
In the last meeting in May, the BCU announced its entry into a contractionary phase of the monetary path with the increase in interest rates of up to 9.25%, to which two additional increases of 50 basic points are added to bring rates to a convergence of projections with the inflation targets.
In September 2020, the Central Bank decided to change the monetary aggregates, which serve to quantify the money that exists in an economy through the sum of coins and banknotes in circulation and bank deposits, for interest rates as a policy instrument monetary.
Since then, the monetary policy rate has been set at 4.5% per year, reaching 9.25% at the last meeting in May.
The IMF said that the BCU’s position was “moderately contractive” and therefore asked it to take tougher and more aggressive measures to control inflation, which in April closed at 9.37% year-on-year.
The organization maintained that the country’s recovery is “firm”, despite a volatile external environment.
The conditions “are appropriate for further fiscal consolidation efforts while supporting the most vulnerable to mitigate the impact on them of the sharp rise in food and energy prices,” they said from the agency.
Source: Ambito
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