Regarding inflation, the study maintains that this year it will close at 57%, almost three points more than the previous study (54.2%), with the highest estimates between 65% and 73.5%.
To try to stop a run towards the dollar after knowing the inflation data, the Central Bank decided this week to raise the annual nominal interest rate of the Liquidity Letters (Leliq) to 28 days, from 44.5% by 250 basis points. to 47%, which represents an Annual Effective Rate (TEA) of 58.7%.
This will in turn be transferred to the rates of fixed terms, which according to the BCRA for deposits of up to $10 million made by human persons will be 46% per year at 30 days, which represents a yield of 57.1% of TEA . For the rest of the fixed terms of the private sector, the guaranteed minimum rate will be 44%, with a TEA of 54.1%.
In this sense, the roadmap for the coming months has already been drawn: “Lending interest rates remain at levels compatible with the promotion of investment and production, and the development of the Mipyme sector. Additionally, the BCRA will continue to regulate the conditions of access to credit for family consumption,” said the entity.
Despite the measure taken, the entity clarified that “lA rate hike is a necessary condition but, by itself, not sufficient to reduce inflation”. According to him, it will also be necessary “the consolidation of exchange rate stability through a process of accumulation of international reserves” and “a downward exchange rate gap in the so-called financial dollars, reflecting the perception that the fundamental determinants of the macroeconomy have improved. “.
He also assured that “the reduction of the fiscal deficit will be necessary, which will require less monetary financing”, and “a downward trajectory of the stock of remunerated liabilities of the BCRA (Leliq and Passes) in terms of GDP, as a consequence of the lower primary issue , the gradual convergence towards fiscal balance and a greater demand for money due to the consolidation of a sustained growth process”.
The dollar no longer works as an anchor
But the market does not have full confidence in this expectation. A recent report by Miguel Kieguel states that raising rates “will not be enough” to reduce inflation, despite the fact that the measure “is on the right track.” “We believe that more rate hikes are on the way. And while the 250-point rate hike is correct to prevent the exchange rate gap from exploding and further restrict liquidations, it is not enough to lower inflation significantly. More still the market has the conviction that the Central Bank runs to the inflation from behind”.
“There is no room for an exchange rate anchor. The monetary base is growing at a rate of 45%, that is, 10 points less than inflation. The government could try to cool down the economy more, but that would collide with a complex social situation and a situation hyper complex policy. So we are not too optimistic about the near future of inflation. The alternative is a stabilization plan, but that is precisely what was wanted to be avoided in the negotiation with the IMF where inflation is a residual of other objectives”, concluded the economist.
Source: Ambito
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