Some private sector forecasts for June inflation are beginning to be released and, in general, there is a consensus that will be below May levels, when it was at 7.8%, data lower than that of April (when it was 8.4%). Most think it will start at seven, but some even put it below 7%. And faced with these expectations of a slowdown in the rate of price increases, the market begins to analyze what the Central Bank (BCRA) will do with the traditional fixed term rate.
They also indicated that the various high-frequency indicators of wholesale and retail prices monitored by the BCRA suggested that, in the first fifteen days of June, an additional slowdown was seen in the rate of price growth, which made the forward inflation outlook positive as well.
Fixed term rate: inflation, a key variable
Now, the projections of private analysts would confirm this perspective and, taking this context into account, Claudio Caprarulo, director of Analytica, assures Ambit that, “given the slight deceleration of inflation, we do not expect changes in the monetary policy rate during July”. And it is that the consultancy expects a level of price increase for last month of around 7.1% and that leaves the monthly yield of 8% that guarantees the traditional fixed term at this time in positive territory.
Thus, taking into account the background of what the BCRA has been doing, the economist Federico Glustein also expects that “it should support the rate as it is.” His expectation is based, on the one hand, on the fact that inflation slowed down slightly, in his view, “thanks to the fact that, in the second semester, there is usually a slowdown in activity and consumption for reasons seasonal”.
And, on the other hand, he points out that “thinking about the electoral scenario, the one that is dollarized as a way of coverage, will not stop doing it due to a new rise”. So, he considers that they should maintain the rate to guarantee positive returns to those who bet on the fixed term, above all, because “many people habitually deposit the bonus on a term basis, especially to pay debts.”
Is a drop in fixed term rates likely?
This way, discard the variable that many raise in the City at this time that the BCRA could think of a drop in rates forward. And it is that, as Sebastián Menescaldi, economist and director of Eco Go, puts it, “although inflation slowed down in June, there is no consolidated trend in sight in that sense and that is added to the weakness of reserves, the external sector complex and the uncertainty caused by the electoral scenario”. This context, according to his vision, does not give the BCRA a chance to think about reducing the rate.
Consequently, as Camilo Tiscornia, director of CyT Asesores Económicos, points out, What can be expected for this month is that the BCRA “finally resolves to leave the rate unchanged” one more time. Although, according to his vision, it would be advisable for it to be higher in order to achieve greater effectiveness in controlling inflation. And it is that, for this economist, a more forceful message to the market in terms of rates would still be necessary to achieve a stronger control of the inertia of prices in the economy.
For the moment, that would not come and the Central board of directors would be thinking about a continuation of the policy that it applied in June of not changing the returns of the traditional fixed term as long as inflation remains below 8% per month, since it guarantees positive returns. or neutral to the extent that these levels are registered in the rhythm of price evolution.
Source: Ambito
