The Importance of Having a Law
The structural reforms law and fiscal packet saga seems to be ending largely because the opposition is running out of excuses not to give something to the government, which maintains a positive image of 55%. Meanwhile, the government is willing to concede almost anything to get its approval because it needs to demonstrate some degree […]
The Dollar and Activity Levels Take Center Stage
Since Milei assumed office, the economy has been moving in one direction: full steam ahead with things improving. Inflation has been steadily falling since its peak in December, the country risk has been dropping from 2,200 points and reached nearly 1,200 a few days ago, and the parallel dollars remained stable. The Central Bank saw […]
Lower Rates and a New Monetay Architecture
The Central Bank lowered the interest rate three times in less than a month. It went from 70% to 40%, which is quite unusual. Especially for a situation where the volatility is not what it used to be, for example, in June 2022. Inflation is decreasing, and so are expectations. However, 40% implies a negative […]
Very Good First 5 Months, Now Policy Will Be More Challenging
In the first months of Javier Milei’s economy, everything went as planned. The efficient management of the government deactivated the risk of hyperinflation in the context of one of the worst inheritances in memory. The data show that the country risk fell by half, Argentine stocks measured in dollars skyrocketed and public opinion bore a […]
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” […]