For example, C&T, a consulting firm that presides Camilo Tiscornia has just released its survey of retail prices for the region Greater Buenos Aires (GBA): 16.3%, falling from 19.6% in January. In this way, the interannual variation rose to 275%the largest since March 1991.
Meanwhile, the study Econometric who presides Ramiro Castiñeira esteem for February an inflation of 14.0% monthly, (278.7% year-on-year). And the price index food and beverages reflected an increase of 1.4% during the week, accumulating a inflation of +9.7% in the month of February (moving average).
In any case, it is clear that in the interior of the country there were no utility increases of similar magnitude to those that took place in the G.B.A. during February. Therefore, “one can expect a lower inflation in the rest of the country and, therefore, in the national total.”
In the presidential environment it is said that the president is very satisfied with the achievements of the policy implemented by his minister of Economy, Luis Caputo since the objectives of accumulate reservesshorten the gap between the official dollar and the financial onesreduce remunerated monetary liabilities and financial surplus in the accounts of Treasure.
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Reuters
Milei assesses that you are making faster progress than expected with a fiscal adjustment so drastic that it had no parallel “not only in Argentina but in the world”according to what he told the newspaper Financial Times.
These results were obtained because, ultimately, the scheme devised by Caputo. The Minister’s bet was that the inflation rate beats the interest rate –to liquefy liabilities. But the rate was also above the official devaluationencouraging foreign exchange settlement of exporters.
Economic changes
This scheme is not sustainable over timeas considered not only by economists but also by International Monetary Fund (IMF). In the latest report on the country, the organization indicates that by the end of April it is planned to carry out “he refinement of the monetary policy framework, to ensure that it is well anchored… and consistent with price stability”.
It would not be surprising that, as the markets move forward, the Treasury Palace must adopt a decision before this date.
In light of the President’s statements, it is to be assumed that economic management will adopt a monetary aggregate as nominal anchor looking to the future.
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This Thursday, Milei posted on X (ex Twitter) that “lInflation is always and everywhere a monetary phenomenon “which arises from an excess supply of money that causes the purchasing power of the currency to fall and with it all prices expressed in units of local currency to rise.”
“The dollar, being a financial asset and therefore adjusting faster than goods, anticipates prices (not that it causes prices to rise). Using this analytical framework, I propose to look at what is happening with monetary aggregates in nominal, real and GDP terms. If they don’t get the math wrong they will see the light at the end of the road and will understand what makes the caste so nervous…“, concludes the post.
However, the minister Caputo knows that more than one specialist maintains that An exchange rate anchor would be a better option to break inflationary expectations, within the framework of a bimonetary economy and closely monitoring the evolution of the exchange rate.
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For now, the president considers that “we have avoided hyperinflation”and announced in statements to the British newspaper that “our objective is continue lowering inflation. . . [y] finish cleaning the [balance del Banco Central]. Once he Central Bank is cleanwe plan lift exchange controls. . . He IMF estimates that we could do it midyear”.
It should be added that for the lifting of the stocks in the Treasury Palace they don’t think about applying additional financing to the IMF. It turns out that this would require a new program, which would have to go through the Congressinstance that the Executive would have decided to avoid, according to economic driving sources.
But it cannot be ruled out that, at some point, it will be activated pending loan disbursement awarded at the time to the former president, Mauricio Macri. It should be remembered that there is a remainder of more than US$10,000 million.
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Depositphotos
On the other hand, the good harmony that the Government has with the USA and the results of the economic plan, it is not ruled out that there may be a additional help. The meeting he held in Brazil, Luis Caputo with the owner of the Federal Reserve, Yanet Yellengenerated this expectation.
The president believes that lifting exchange controls will open a virtuous circle of economic recovery: “We could have a lot of investment despite not having institutional changes. . . and this could be the take-off point so that next year the Argentina is growing stronglysolid, sustainable and with low inflation.”
Protests over the adjustment
One of the main doubts that analysts raise is whether society will tolerate the severe adjustment plan underway. The latest salary data shows that registered they almost fell 14%, in real values, only in December. The case is worse informal workers and retirees. Private calculations estimate that the assets of the passive classbonus included, fell in February around 30% year-on-year.
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Depositphotos
He collapse in income matches a deterioration of economic activity. Last January the car registration 0km fell 32.7% in relation to the same month of 2023; the construction (Build Index), 29.2%; and the retail sales SMEs, 28.5%.
However, the President is convinced that he is carrying out the changes requested by his voters. For this reason he believes that “there is zero chance of a social uprising, unless there is a politically motivated event or [uno que involucre] to foreign infiltrators“.
Precisely, this Thursday, the chancellor Diana Mondinoin journalistic statements warned that there are infiltrators from Cuba and Venezuela in the country whose specialty is destabilize governments.
Source: Ambito
