Higher Rate for a New Inflation Regime

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Higher Rate for a New Inflation Regime

Third week
September 2022

The Central Bank has been actively using the interest rate this year, and compared to December 2021, the 28-day Leliqs rate (that is, the monetary policy rate) went from 38 to 75%, with which it practically doubled. The latest increase, which took place last week, was of 5.5 percentage points and the new effective annual rate now stands at 107.35%. That is less than the annualized inflation for August, but it is in line with what we think will be the annualized inflation for the next 3 months. In other words, for the first time in a long time, the monetary policy rate will be neutral or slightly positive if one is somewhat more optimistic than we are with the inflation estimates.