Monday , May 17 2021

Macro and Sandleris glory: inflation falls and demand for money is growing

The central bank today announced that it is "in the process of" slowing down inflation and expectations of rising prices in the coming months, while demand for higher activity is growing.

This is the data that promotes celebration in the entity led by economist Guid Sandleris, as the results of its contractual monetary policy, launched on October 1, with the protection of the International Monetary Fund (IMF).

Although all the end of the year increased demand for silver for higher spending, during December, a recovery that "surpassed the seasonally planned seasonal variation" was noted, indicating that the "registered drop began to recover" during most of the unstable year 2018. The economy would show signs that the recession found the floor.

Increased demand for the parcel had its pandan on the foreign exchange market as well: the purchase of a buckwheat dollar amounted to $ 13 million a day in the last quarter, which is the lowest value out of the pitfall of the exchange rate.

The course has reduced the volatility of the spot and forward market. Particularly in the maturity market, due to lower demand, the Central Bank has not restated the deals previously offered, so its position at that market closed at zero at the end of 2018.

The Monetary Policy Committee of the entity considered that, given the rise in demand for currencies, the monetary base target (MB) established in the January scheme generates sufficient contraction bias and is in line with the ongoing disinflation trend.

On the other hand, February and March are months with seasonal demand for historically lower currencies. Therefore, the Central Bank will meet the monetary base target in January and could outperform it over the next two months.

The central bank will announce an eventual margin of excessive alignment at the beginning of the corresponding month, which will be calibrated on the basis of currency demand behavior up to that point, the statement said.

Buying and selling dollars

The entity has confirmed that it will also be vigilant in its interchange strategy to be applied if the course is outside the zone without intervention.

Convinced that no major disruption will occur, the Monetary Policy Committee decided in January to maintain the same parameters already announced for December.

If the exchange rate is below the non-mediated zone, the monetary base target will increase with the purchase of dollars through the Central Bank tender.

These offers will be up to $ 50 million a day. Accumulated in the month of these offers must not exceed 2% of the target.

If the exchange rate is above the non-brokered zone, the monetary base target will be reduced by the sale of the dollars obtained through the offer from the Central Bank.

In order to maximize the impact on liquidity, these bids will be up to $ 150 million a day, maximum foreseen in the scheme.

Achieved Goals

The central exceeded BM's target over the first three months of the new monetary scheme. BM's monthly averages in October and November amounted to $ 1.253 billion and $ 1.256 billion, $ 19,000 million, and $ 15,000 million lower than the $ 1.271 billion target.

In December, the plan considered raising the BM's target to $ 1.351 billion, which was followed by seasonal growth in demand for money from transactions. The BM's monthly average was $ 1.337 billion in that month.

In other words, excessive compliance in December was $ 14,000 million, which is slightly less than the objective excessive of $ 16,000 million established at the previous meeting of the Monetary Policy Committee.

Source link