Friday , January 15 2021

IMF backs changes in Central, but warns that falling inflation remains a "difficult challenge" for the government

The content of inflation is a priority at this point, and the equalization of the exchange rate can contribute in this sense, the goal in which the Government and the Fund are absolutely harmonized.

As stated by the IMF's chief spokesperson, Gary Rice, "the latest data from the Consumer Price Index show that breaking inflationary inertia is still a difficult challenge for Argentine authorities." However, he added, "the current framework of monetary policy is appropriately designed to face this challenge."

"We welcome the changes in the framework parameters released today, along with the recent decision to continue the growth of the zero base to November, should help to bolster inflation expectations," Rice said.

The figure of inflation did not surprise the offices of the Fund, which recently expressed "disappointment" with the constant increase in prices in the first months of the year. In addition, officials who carefully monitored the Argentine case in recent days expected that the numbers did not go well for March and April and that the drop in the index would only be "gradual."

A good part of the economic driving team Nicolás Dujovne, as well as the chairman of the Central Bank and his number two, Gustavo Kanoneerothey were in Washington last week where they held reserved meetings with heads of multilateral organization, including David Lipton, the second from Christine Lagarde, and the head of the mission for Argentina, Roberto Cardareli. These meetings, which were held behind closed doors, do not go beyond the details of the US capital. The hermetic of the Argentine officials was virtually total.

In a very short exchange with Infobae and other media in the Fund's corridor, Dowiweni strongly denied on Sunday that they are negotiating a modification of the program with the IMF or changes in the band scheme established within the monetary policy of the Central Bank. In the past days there have been persistent speculation that the government has demanded a relaxation of this scheme, with more maneuvers to maneuver in the event of an increase in exchange pressures, as the calendar is approaching by October.

The announcement of Sandleris finally went in the direction of freezing the roof and the floor of the band with which the dollar could fluctuate without intervention, which will allow until December the US currency to move in a limited sail between the current 39.75 and 51.45 pesos. This interchangeable corset, in turn, needs to stabilize other variables. First, inflation, the main source of concern in Washington and Buenos Aires.

The original IMF forecast for inflation this year in Argentina was 20 percent. He had to straighten him out two weeks ago, announcing him staff report of the third revision of the agreement stand-by for $ 57,000 million.

But that correction, which increased the forecast to 30.5% for all 2019, could also fall short, although the body trusts him, as well as the president Mauricio Macri, in which the index will tend to fall in the coming months. So far, reality is responsible for refusing all official calculations.

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