Tuesday , January 19 2021

Monetary Base: BCRA says it will fulfill its target in December



With this, the government will keep unchanged one of the pledges pledged to the IMF and that better results result in at least the eyes of Italian technicians Roberto Caldarelli, who is responsible for the fund monitoring the number of Argentina. For the Agency, maintain the strategy of not accelerating the monetary base and maintaining it under the agreement in September last year; when the targets were renegotiated and the payments paid were accelerated until December 2019; when they originally agreed until 2020. The movement of the season expansion in the last month of the year was part of these negotiations and BCRA intends that both the IMF and the market are confident that the target in December will remain on track. Central knows that it is a time when the government is to expand its spending base to meet its internal tax liabilities throughout the year, which can create some kind of concern among private individuals. Especially before the announcement of greater availability of resources to meet the requirements for working capital to cover notifications of higher levels of peso transfer to the most vulnerable sectors. The message that BCRA wishes to take is that the availability of funds is covered; and that the signal that will be sent is also that there will almost not be renewed Leliq.

The government confirms that in the case of this variable, the expansion of the monetary base and the obligation to keep it in control may be the chapter in which better IMF qualifications should be obtained. In November, BCRA exceeded the target of not increasing it, with the monthly average being $ 1,256 billion, $ 14,500 million below the target and $ 4,000 million over the October average. The rise of the base compared to October was explained by the company due to an increase of $ 15,000,000,000 in unpaid bank reserves, which was partially offset by the reduction in the monetary revenue of $ 11,000 million. In order to meet the objective, BCRA last month expanded the auction of Leliq with an average interest rate that was gradually reduced until it reached 60.8% at the end of the month. In the first two days of December, BCRA decided to drill 60% and place it over 59%, which level it was maintained. The closing yesterday was 59.23%. Generally, they are 7.4 percentage points lower than the 73.5% that the variable had reached on October 8th. All this with a kind of change that sailed comfortably in the zone without intervention, closer to the floor of 36 pesos on average than the ceiling close to 45 pesos. The scheme, even with the external pressure that occurred this week due to the international noise that comes from the American crisis. and China, the difficulties in Britain for brexite and internal conflicts in France; It was supported by traquilidad, with one dollar yesterday closing in increase, but in the 38.79 pesos; also closer to the floor than taken by the area.

In October, Sandleris had secured the commitment to success with its strategy, so it was credible before the market (and the IMF) was to maintain control of the monetary base. In particular, he said that "the main element in this order is a monetary obligation to grow to zero percent until June, with seasonal adjustment in December. This rule is strict, clear and easily verifiable, and we expect it to be effective to control inflation. The theory behind it is also quite simple: there should be no overweight in the economy. "

The strategy involves per. Definition that the government will maintain its primary commitment in the controlled IMF but that monetary policy will continue to last until at least at the end of this year and in the first quarter of 2019. And even with the control of the Leliq edition of December, The letter's file is currently close to 720 million pesos, following the strong demand from banks for this instrument. It would be the financial units that should first see the December strategy and then turn the signal to the domestic markets, which shows that despite the seasonal expansion of the monetary base, this is within the framework of the agreement with the IMF and compliance with the annual targets .

Until November, the annual growth rate in the monetary base fell to 39%, from the previous 40.9%, inherited from the management of Luis Caputo.


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