President Diego Labat and Vice President Washington Ribeiro accompanied the increase suggested by the manager of Economic Policy and Markets, Adolfo Sarmiento, while the representative of the Broad Front, Ignacio Berti, voted negatively for the same reasons. mentioned in the four previous rate increases resolved by the BCU, with the argument that it is still necessary to prioritize economic activity and employment.
On the other hand, the minutes mentioned that regarding inflation, “short-term projections indicate that it would remain around the value of January (8.15%), although an increase is considered, within the risk map, due to possible impacts of the evolution of commodity prices and agreements salaries”.
After the Copom meeting in November, the monetary authority had warned about the deviations in salary agreements with respect to the government’s guideline. “In the first wage agreements reached deviations have been observed with respect to the salary guideline proposed by the Executive Powerboth in the nominal adjustments as in the frequency of corrections, increasing the risk of indexation of the price chain”, the official statement said at the time.
On the other hand, the minutes indicated that the peso depreciated 0.4% on average in January, “despite the fact that a slight appreciation was expected”, in a context of higher policy rates and higher commodity prices.
Meanwhile, M1′ —sum of money issued by the public, sight deposits and public savings accounts in the banking system— showed an increase of 16.4% in January, “somewhat above than projected. The greater dynamism was reflected in liquid deposits, observing a higher monetary multiplier, which reached a new historical maximum of 2.8% in January”.
According to the minutes, according to the latest available indicators “the growth of activity in 2021 is confirmed, exceeding the initial projections in magnitude. Likewise, a positive figure is expected in the first quarter of 2022 accompanied by improvements in the labor market.”
