Problems to control inflation, according to the analysis
What is that stimulus? According to the economist Maria Castiglioni, director of CyT Asesores económicos, one of the problems that the government has to control inflation is that “implementing methods are already being used that have not worked in the past, such as controlling the price and some specific programs. which are proven to have little impact, such as rate hikes.
He also observes that “today he has added the problem that pesos are less demanded, which affects local monetary dynamics in a context in which the Government does not resort to direct issuance, but is indirectly diversified through dollar programs.” important in inflationary dynamics, as well as in credibility.
On a similar line, Buteler believes that the government’s big problem is controlling inflation, despite the fact that it takes policy in this matter, not to fully apply them. “Some of them are going in the right direction, such as the lack of control, which is said to be falling, to invest real positive rates, but the problem is that the issue is not controlled,” he says.
The government has filled soybeans with dollars twice, but that affects monetary policy.
Courtesy: Southeast FM
He warns that programs that use his tools, such as the soybean dollar, which was implemented last December, will produce the strongest results. “There was a time when it usually requires a lot of money, but when that demand begins to fall, pesos remain in the market and cause the issue to accelerate and to act on either exchange rate,” he says.
Difficulties in negotiating a price
Thus, for Santiago Manoukian, Ecolatina economist, the problem is “a series of factors that have pressured the inertia of inflation and trying to disarm it is difficult.” One of them is the drought in the production of grains, which is transferred to the prices of some foods, as happens when the adjustment of the price of cattle goes up, which moves the amount of meat.
Likewise, he believes that the creeping exchange rate peg (daily microdevaluations of the dollar carried out by the official Central Bank) adds more fuel to growth, because the expectation of devaluation, moderate, is real, but real and expected.
“We already saw the effect of those variables on some data in February,” Manoukian says. In fact, the Ecolatina CPI for Greater Buenos Aires rose 6.6% monthly in the second month of the year (+105.5% yoy), accumulating an increase of 13.4% for the year.
What next: will the government be able to control inflation?
As for expectations about whether the government will be able to control inflation or not, at Ecolatina “they believe that the current trend will continue”. Manoukian explains that this is partly due to the difficulty the agency faces in implementing the pricing program.
“On the other hand, the level of productive fragments makes it very difficult for the Government to control the dynamics of food prices and we have to wait for the future to continue growing as part of the profit,” he comments.
And on the contrary, he affirms that in terms of the Fair Price, although he has obtained the highest agreements, he will begin to develop them in the coming months, because the “Leaders” that the Massa trade offers. participants have better access to exchange imported dollars in the official market and, if it is more difficult for him to meet the end of the reserves, he anticipates that he will have greater difficulty in complying with that agreement.
For Castiglioni, for his part, the problem is that he has not been applying the right ingredients and he believes that “inflation should be attacked by strong instruments, such as monetary depreciation and fiscal deficit”. These are the elements that the Government proposes as part of its policy and are valid, but it indicates “do not comply with them because it forces the release of funds to implement some programs, such as the soybean dollar program.”
The Fair Prices program is a key element of the government’s anti-inflation strategy.
Along the same lines, Manoukian believes that “calling for partial and gradual measures, as we do”, will be difficult to control the growth in the short term. And he criticizes “the lack of a firm and credible policy of stabilization in economic agents and with political support”. Likewise, it is expected that the Government’s next steps to pursue the reduction of the fiscal deficit, such as adjusting tariffs and tariffs, may accelerate inflation in the short term, which will make the objective more difficult.
So, although, as Buteler notes, there are some current measures in the right direction, as estimated by analysts: the lack of a way to control the amount of positive real rates, that is what the Central Bank has. fact (BCRA); There are other issues that undermine the objective, such as the lack of dollars, the difficulty of controlling prices and, for that, the main obstacle is the issue.
“The Treasury needs new resources, but it’s not coming from the BCRA,” he said. Thus, he proposes that a viable plan for the liquidation of the land in the future would be to stimulate the reduction of detentions, since this does not incur inflation. “It is true that the collection would be strong, but it would preserve resources, which are important,” he concludes.