The Central Bank's Monetary Union Committee resolved, and "decided to provide more details about the functioning of the monetary regime over the next few months, to predict actions related to aggregate management, currency and exchange intervention."
"The incentives, according to high frequency indicators, show signs of a slowdown in inflation expectations. The average inflation expectations in the next 12 months, measured by Market Expectations Survey (REM), occurred in November 29. This record was 33.4% at the end of August, 32.9% in September and 32.1% in October, with an accumulated fall of 4.6 percentage points in the inflationary rate of three months, and the drop in the measurement of inflation expectations in the median (2.9 points).said the organization.
He also stated that in October and November the monetary base (MB) was exceeded, "since the monthly averages were less than $ 19 million and $ 15 million, from $ 1,271 million respectively."
"Two months after the significant fall in inflation expectations and, according to the forecast, the weight of interest rates of 60% were eliminated," said the entity, "this interest rate was introduced on August 30 under the previous monetary regime and the new scheme was launched It was confirmed on August 26. "" At that time, the BCRA defied the default commitment, even though the floors restricted the endogenous nature of the interest rate in a system of aggregate regimes, "he argued.
The BCRA has assured that "the next months will continue to be very vigilant," to which COPOM will also "plan to face December". "The excessive requirement will be at least $ 16 million, which keeps the gross achievement in the last two months," he added.
COPOM established the following exchange intervention strategy in order to apply the exchange rate to non-intervention areas:
When the exchange rate is not below the intervention area, the monetary base will be made with the purchase of dollars. The offers will be $ 50 million in December. The amount accumulated in the months of these offers can not exceed 2% of the target.
Likewise, as was predicted, if the exchange rate is above the non-intervention area, the monetary base objective will be reduced by the BCRA through dollar sales. In order to maximize the impact on liquidity, offers will be $ 150 million per day, which is expected to be in the maximum monetary regime.
Finally, within the drop in inflation expectations, COPOM will not determine the limits of the intervention area for intervention, which will guide BCRA actions in the first quarter of 2019. As a reference, taking into account the current limits of 31 December 2018 (37,117 and 48,034 respectively), the limits of the intervention area will not be updated daily by 2% monthly rates, from January 1 to March 31.
"All the resolutions referred to in this communication have been approved by the members of COPOM, including the chairman Guido Sandleris, the vice president, Gustavo Cañonero, the second director of Verónica Rappoport, Enrique Szewach, the Managing Director of the Central Bank and Mauro Alessandro, CEO of the Director of Economic Research.