The measures that the Government announced seek three objectives at the same time, one of which is key in these circumstances.
The measures announced by the government They look for three objectives at the same time, one of which is key in these circumstances. On the one hand, Minister Massa is trying to recover the management initiative -in contrast to the position assumed by President Fernández in the last few hours- since the announcement of the set of decisions comes after knowing the inflation data for April and some hours before the opening of the markets on Monday, especially that of the financial dollars and the blue dollar.
It is a political feint that shows Massa at the head of a large multidisciplinary team, giving the discussion with the political opposition.
dollar and after
Secondly, the key element, the measures try to keep the demand for pesos high in the economy, either through a higher interest rate in banks in the middle and high income sectors, and a propensity to unlock the consumption of goods and services in low-income households through programs such as Ahora 12 via a reduction in rates. This is fundamental because, although there are those who maintain that the excess monetary issue, that is, a greater supply of pesos, has boosted inflation levels, the economic team is now placing superlative attention on the demand for pesos.
This is vital. A drop in the latter has a similar impact to an additional supply shock. All the measures aimed at lowering the price of widespread inputs and food could be included in this plan, including enabling the Central Market as an importer – new demand for dollars? – that tries to give a boost to purchasing power through an adjustment in real wages.
Fixed term, peso depreciation and IMF
Although there are several vectors for the analysis that would amplify the panopticon, the third point seems destined to sustain the negotiation with the International Monetary Fund. Why could it be thought that this is the main anti-inflationary measure? Because the Government believes that, regardless of all the decisions it may make, the true objective it sets is to maintain the exchange rate gap at average levels and, for this, it must add dollars to the reserves.
central bank
The IMF seems to be, for now, the only one that can give Massa enough support to launch some anti-inflation plan with the possibility of slowing down the rise in prices. Measures such as a greater speed in the Central Bank’s crawling peg or a higher interest rate are the necessary requests that the body is demanding to make this disbursement. With these resources, Minister Massa thinks that he will be able to stabilize the variables, among them the dollar, which, in another way, react every time the inflation data is known. For now, the idea is to strengthen the exchange rate, since its improvement implies a kind of negative supply shock that, in some way, compensates for the drought.
Source: Ambito
