Wednesday , January 20 2021

Sandalis: The economy is still going through very difficult months

At the meeting, he admitted that the Argentine economy was "is still going through very difficult months" and believes that the government has committed itself "Errors" when faced with economic imbalances "Inherits",

The head of the monetary authority recalled that inflation was 6.5% in September and 5.5% in October, and underlines this "everything suggests that in November it will be lower", "It's still high, it's a lot of work, but I think we're moving in the right direction." he pointed out.

"We are still experiencing very tough months," Sanderis admits, for which there are three elements that have led Argentina to this situation: "inherited" imbalances, "international shock" to raise interest rates "faster than expected," and another a local land-based factor that "had a negative impact on the economy"; and "the mistakes made during these three years".

At the last moment, Sanduris recognized: "We were wrong in achieving the necessary consistency that fiscal imbalances, inflation and relative prices should have, and we underestimated the speed at which international circumstances may change."

He said that these three elements led Argentina to have inflation in September of 6.5% in September against the same month in 2017, two times higher than that of developed countries in one year, and Argentina's peso "This year I lost half my value."

"We chose the monetary base because it was a simple, transparent and easily verifiable instrument Given the evidence that there was a surplus of peso, a policy of absorbing all the peso so that the monetary base did not grow, seemed strong and verifiable, it seemed important to have a tool for rebuilding trust a little, " he maintains.

He also noted this "In Argentina, the exchange rate plays an important role in creating expectations, and we thought it important to provide an important guide on how the bank would act, so we created the intervention areas and not the currency intervention."

"In the first two and a half months, the dollar remained, there was a decline in volatility and a fall in inflation." he stressed.

And he noted: "Last week, we announced that in December we will maintain excessive compliance with the monetary base, and we will move forward when we see that market situations are not such as to allow us to relax conditions."

Additional, "There is an international situation and the usual uncertainty about elections, we need to be careful about how to conduct monetary policy and do it", he condemned.

Sandleris said the new monetary policy cut interest rates by 15 points because it achieved greater stability and lowered inflationary expectations. "In the future, the Central Bank will remain very cautious, will create confidence that inflation will continue to fall and the interest rate will decrease."

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