The former Minister of Economy considered that the sharp slowdown in inflation that occurred between January and May was a product of the recession and the limited adjustment of the official dollar. However, that process was slowed down and now the Government faces a dilemma in continuing on that path.
After the December peak, the inflation began in January a path of marked decelerationalthough in May that cycle was interrupted and, since that month, the consumer price index (CPI) remains around 4%. Although the official measurement of the National Institute of Statistics and Censuses (INDEC)the consulting firms expect that in September the price variation will have pierced that key level.
In that sense, the former Minister of Economy and ideologue of convertibility, Sunday Cavalloconsidered that the strong deceleration of inflation was the product of the recession and “the very limited adjustment” of the price of official dollar after the devaluation of December. “Monetary policy was rather passive until May, accompanying disinflation driven by fiscal adjustment and exchange management, and became expansive starting in June”he said in a new note published on his blog.
For the economist, the expansive monetary policy was what explained why the recession hit bottom in the second quarter and began a path of “reactivation” of the economy. Although, this would also be one of the causes that “the disinflation process has stalled and a conflict is beginning to appear between the objective of continuing to lower inflation and that of supporting the recovery of domestic demand and production.”
Along these lines, Cavallo assured that the Government is trying to promote the inflationary slowdown “by paralyzing the relative price readjustments still pending and even reversing those that may have a more direct effect on family income.” However, he was categorical: “This policy does not have sustainable effects over time”.
News in development.-
Source: Ambito
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