Monday , October 3 2022

Inflation: the market maintained a 47.5% projection for 2018, but the expectations for the next 12 months


Inflation expectations for the next 12 months reached an average 29%, 3.1 percentage points less than in the previous measure.

Here are the third consecutive drop-in inflation expectations measured by REM and it opens the possibility that the Central Bank will reduce the financial policy rate and that Leliq will fall to the floor 60% as I anticipated last month. entity holder, Guido Sandleris.

In fact, today, the BCRA paid 60.003% at the daily auction.

"Inflation expectations are declining in October's survey in all the time surveys inspected," he said the official report.

The REM took place between November 27 and 29, where 53 participants were forecasted (2 fewer than in the previous event), among which there are 32 local consultants and research centers, 14 Argentine financial entities and 7 overseas analysts.

During the measurement at the end of November, inflation expectations for the next 12 months, that is, up to the same month of 2019, were 29% by average and 28.6% by median.

This is 3.1 percentage points less than in October by the average and 2 percentage points, by median.

"This is the third reduction in this indicator by the average (in October he received 0.8 pp and in September 0.5 pp) and the second according to the median (in October it dropped 1.3 pp)," he said the report.

Although REM's annual forecast for 2018 remains 47.5%, and has decreased in all subsequent stages: 27.5% for 2019 (-0.3 tt) and 19.2% for 2020 (-0.4) pp).

For December, the REM showed a 2.7% inflation (-0.1 pp in relation to the October survey), for January it was 2.5%, but dropped 0.2 percentage points for February to 2.3%, and 0.1 for March in 2.3%.

With all this, the forecast for December of the monthly monthly average of the financial policy rate (LELIQ) was reduced by 500 points, ranging from 65% in the previous survey to 60% in the present.

The Central Bank today auctioned 163,633 million in Liquid Bills (Leliq) to 7 days at an average rate of 60.003%, the lowest rate since a daily tender scheme started on October 1 with a 75% product.

The REM forecasts rejected the nominal exchange rate. Analysts expect it to be an average of $ 39 per dollar (-0.6% in respect of the previous REM) and will reach December 2019 at $ 48.5 per dollar (-0.8% in relation to the survey in December 2018).

In terms of economic activity, the prospects for 2018 were still possible at a 2.4% reduction, while for 2019 a 1.2% discount is expected, that is 0.2 percentage points less than October

In the meantime, an initial balanced financial return for 2019 is expected in accordance with previous publications and the 2019 National Budget Bill.

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