An hour later Indyk will report April inflation at 3.4% in April, The president of the central bank presented his analysis of inflation expectations arising from the effects of monetary policy, which does not have a "linear path", but "the savers are expected to gain inflation."
"The economic forces that reduce inflation are already underway. We have a strict monetary policy and we replace the basic macro-economic balances: fiscal equilibrium, competitive exchange rate and undistinguished relative prices. Inflation resumed on a declining path but still very high. It is clear to me that these levels of inflation are causing great harm, especially to humility. That is why we remain steadfast with our monetary policy to beat inflation, "stressed BCRA president.
Although there is a cycle of the absence of increases in tariff tables, because the government decided to concentrate them in the first quarter, There is still the inertia effect of devaluation of the peso in April, in the order of 10% (the average exchange rate for the last month was $ 41 and in the first half of May stabilized around $ 45 of the wholesale band and $ 46 for sale to the public); With the addition of periodic adjustments of fuels, Which depend on a combination of exchange-rate parity and international prices; Plus the lag they charge in the sectors most affected by inflation.
On the other hand, the expansion of the treatment-price regime appears to be a relatively minor factor, including the essential prices for 60 products, along with the difficulty of monetary policy, which translates into a "basic zero emission"; And in the high rates of market efficiency, although it began to decline slightly, it remained above 71% per year for 7 days, equivalent to more than 5.5% per month, in order to prevent pressure on the exchange rate.
Causing increases since October
In the second half, in January-March, the monetary authority saw that the acceleration of the rate of price increases was due to the effect of "the concentration of most of the tariffs, in addition to the direct effect on the index, which led to price increases in a wide variety of products.
The president of the central bank added: "It does not fall in the depreciation of the exchange rate as it was in the past." The depreciation of the exchange rate was lower than inflation in recent months, but without compromising the correction of the external imbalance, we started from a very competitive exchange rate, and the result of the external sector will not be affected. "
"The context is challenging world-class because the two major economies of the world are in a commercial conflict that has an impact on the rest.In this international case, an important source of uncertainty associated with the next presidential election is added to our country.In these circumstances, Monetary policy should be strict to protect our currency And promote domestic savings. We already do that, "Sandelis stressed.