The strategy of liquefaction of the remunerated liabilities of the Central Bank has reached a crossroads in which, if not for a further reduction in the rate for which there does not seem to be room, it will continue for a rise in inflation. That is precisely what is expected from now on, even if the index announced by Indec next Thursday is between 4.5 and 5 percent. This record is close to the monetary policy rate of 3.3% monthly, but would move away again in June if the initial inflation projections are confirmed.
These estimates indicate an increase of at least 1 percentage point in the CPI, as a result of the impact of the rate increase. The rise in the dollar in the last week adds to the higher cost of public services to pressure prices upward.
Thus, analysts point to an index of 6% for this month, even though the latest Survey of Market Expectations (REM) published by the Central Bank foresees a rise to 5.2 percent. “We do not know if the REM managed to capture the rise in the dollar, but it is clear to us that without that increase, inflation could have been falling even with the rate increase. But with the jump in the dollar, we expect it to get closer to 6 points,” they said in the economic studies area of one of the largest banks in the country. The economist agrees with that forecast. Fernando Marull and also, to name a few, the analysts at Delphos Investments.
“With the jump in the dollar, we expect it to approach 6 points,” they said in the economic studies area of one of the largest banks in the country.
The direct consequence of this rise in inflation will be, in return, that the interest rate will remain stable. That does not mean, however, that fixed-term yields will increase their losses relative to inflation. The Minister of Economy, Luis Caputowas clear in that sense and warned the banks that the reference interest rate for these placements It is no longer the one set by the Central Bank for reposbut that of Treasury bonds, to which financial entities began to migrate their liquidity.
In any case, according to the consulting firm Equilibra, in the absence of more profitable investment options, fixed-term placements increased 1.4% in real terms despite the performance below inflation. That loss of purchasing power of savings It will be expanded this month but it seems to have a floor: the same consulting firm considered that the expectation of moderation in the path of inflation reduction that the market anticipates suggests that the cycle of lowering rates is also over.
“The market raised expected inflation between 4% and 5% until the end of the year. Inflation in the City of Buenos Aires was 4.4%, with core inflation of 5.1% in the month. The sharp drop compared to April (8.8%) is partly explained by the nominal drop in prepaid medicine, which triggered a deflation of 4.1% in the health sector in May due to new regulations in the sector. At the country level this impact is minor, so we maintain our estimate of national inflation between 4.8% and 5%,” said Delphos, from where they anticipated that for June the projected index is higher since the increases in electricity rates will impact and gas at the national level and the forecast is a slight acceleration of inflation, to around 6% monthly.
In the first week of June, however, the forecasts did not correspond to the available measurements. For example, according to the consulting firm LCG, prices have not moved since the month began, while for Econviews the advance was 0.6% in supermarkets. Only Econometrica detected a somewhat larger increase, of 1.2%, perhaps compensating for the smaller advance it had captured for May compared to other consulting firms.
