August’s inflation novel has an announced beginning and an open end. In the private sector and the Government they take for granted that the data that Indec will reveal this Wednesday at 4:00 pm is two digits product of devaluation after PASO. The day after all eyes are on parallel dollar and his reaction, easy to imagine but difficult to measure in front of the near inexperienced in a number greater than 10% a month. In that scenario, The Central Bank must make a decision on what to do with the fixed-term interest rate which is at a very high level, and creates a debate about its consistency within the Board of Directors.
When the Central Bank moved the exchange rate to $350 and left it fixed, it accompanied the measure with a strong push of 210 basis points of the percentage that banks pay for interest on Leliqs, which remains on 118% annual nominal. This is a strategy that tightens the monetary policy to avoid a large disarmament of the positions of the peso and their direct migration to the dollar, a maneuver implemented by the entire leadership of the Frente de Todos.
With the monthly rate of prices increasing by double digits every month, City operators have questioned the maneuver as they assert that it has lost its effectiveness due to the rapid loss of value of the peso, the historical preference of the savers for the stronger dollar. and hedging strategies against weight, which are becoming more frequent.
As far as he knows Letter P of the monetary authority, currently, the trend is to maintain the interest rate since the current level will continue to be real positive in annual terms, that is, it will continue above inflation and the new increase will not make a difference. However, they acknowledge that the Monthly Effective Rate in August and September is lower. Current percentage is 9.83%.
The Indec number they will look closely at is IPC Núcleo, which measures 69.9% of the total basket and accounts for the inertia of the inflationary process. In detail, it does not include regulated and seasonal goods and services and shows a medium-term trend.
On Thursday at the board table there will also be a discussion of what will happen if the entity that leads Miguel Pesce took no action on the matter: how weak is the stability achieved in a little more than 20 days following the 22% jump in the exchange rate and until the end of this note they gave him air of the Minister of Economy, Sergio Massa to freeze prices, agree to agreements with companies and recover reserves to liquidate agricultural dollars.
The differential exchange rate for the regional economy has an expiration date of September 30. Currently, there is a liquidation and the BCRA has been able to chain 20 consecutive rounds of purchases, despite the amount of dollars in its coffers remains a critical situation. The period between October 1 and 22, the day of the general election, is a mystery. Neither the monetary authority nor the Economy has confirmed the continuation of the measure or the launch of another but the expectation of a new devaluation after the polls is circulating among consulted analysts and investors and the risk of a widening of the exchange gap continues.
The two digits are now a fact in official reports. The City of Buenos Aires measured 10.8% for August and Córdoba 12.15%. In the private sector, they extended the forecast to 14% and 25% accumulated between August and September, so they foresee another strong acceleration rate and the impact of devaluation will continue, especially in food and beverages where greater the effect. sector of the population with low income.
