Support for Reforms in the Lower House, More Rate Cuts and Less Subsidy Cuts
Last week was a good one for the government’s agenda. The most important thing was “Ley Bases” reform bill’s approval in the Lower House. As expected, it was a bit bumpy, but it worked out. The numbers for the Senate are not entirely clear, but our view is that there is a better chance of […]
Cutting Rates: A Bet in Many Directions
The government decided to cut rates by 10 percentage points and now the monetary policy rate (the Central Bank’s reverse repo rate) is 60% APR, an 82% effective rate. In our base scenario we expected a loosening in monetary policy, but perhaps in June after a more consolidated decline in inflation. Last week’s decision was […]
La inflación juega a favor en abril, pero no cantemos victoria
Los datos de alta frecuencia que medimos en cadenas de supermercados del Gran Buenos Aires (alimentos y productos de cuidado personal) nos mostraron una deflación por primera vez desde que hacemos este ejercicio. Hay muchos peros porque nuestra canasta no es idéntica a la del INDEC y la muestra de comercios es más chica, pero […]
Lower Rates and Gradual Lifting of the Restrictions
The Central Bank lowered the monetary policy interest rate by 10 points, from 80 to 70% annually. Now the banks began to pay time deposits of around 60% annually. There are arguments to lower the rate. The first is that market rates were already very low. The government knows that the rate has to be […]
Two-speed economic policy
It is striking that on one hand, the government has aggressively moved forward with price liberalization and cost reduction without worrying too much about the consequences, while on the other hand, it is being very cautious in relaxing currency controls and unifying the exchange rate. One can understand that there might have been concerns that […]
In Caputo We Trust
The economic team’s plans are clearly biased towards financial issues. And that is the area where Luis Caputo and Santiago Bausili have achieved the most tangible results. They had the dose of luck that is always needed, since country risk fell sharply in all Latin American countries in a world where the “search for yield” […]
The First 100 Days: Test Passed With Merit
The first 100 days of Milei’s government have already passed. An experiment for the Argentine political system. As has already been demonstrated in this short time, politics is precisely the weakest link in Milei’s management. The main figures in the government have no experience in the public sector and the establishment also has to get […]
The “May Pact”, an Opportunity Worth Seizing
The opening of ordinary sessions of Congress left a lot of content to analyze. There were insults towards politicians. The middle class in general supported the speech and there was a conciliatory ending. Relief for the provinces and the May Pact. Beyond the president’s particular style, in the end we all know that seeking consensus […]
The Costs of Fiscal Consolidation Must Be Shared
The national government is embarked on the mission of improving national accounts by 5 points of GDP. We are not so optimistic, but we believe that it is very likely that at least a primary balance will be achieved, which would be very commendable to achieve in a recessive year. Furthermore, we believe that if […]
Asssessment of the Program: So Far So Good
This week Gita Gopinath, number 2 at the IMF, visited Buenos Aires. She came with part of her team and met with President Milei and several figures from the private sector. She was complimentary of the program and outlined some challenges the economic team will face in the coming weeks or months. We took advantage […]