“It is a decision of the Executive Branch. (…) I have no objection, it seems to me a measure aligned with what was sought, which was the concern for maintaining the purchasing power of the workers, in that line I think it is a correct measure”stated Labat in an interview with Radio Sarandí.
“You have to separate the papers. The BCU has a tool that is monetary policy, which, above all, is to ensure the stability of the national currency, to worry that the purchasing power of the peso is maintained and stable. That’s where we’re at,” said the chief. (…) We aim at the medium term, the economic policy horizon of 24 monthsand we always aim for inflation to be and go to a range that today is between 3% and 6%”, he pointed out.
Labat pointed out that “Another thing is the situation that today is very influenced” by the war in Russia and Ukraine, which already had “some problems” due to pressure on commodity prices (such as meat and soybeans) and that are spilling into domestic prices, to which are added some supply problems in fruits and vegetables due to climate issues, “on which monetary policy clearly does not act.”
“That’s why I say that you shouldn’t see contradictions between one and the other. The measure of the Executive Power says: ‘Inflation in recent months has been above what was the base scenario of salary negotiations and a corrective is given to correct that which was misestimated when the agreements were made,’ said the president of the BCU.
In another part of the interview, the economist pointed out that with this type of measure “the consistency” of the policies is not lost. What does monetary policy care about fiscal policy? That it is sustainable and does not generate a debt that at some point ends up being unpayable. That is not going to happen, the main guarantee is the fiscal rule”, he assured.
“The same with salary policy. Could it spark a little more indexing? Well yes, it could, but within reason in this context and the uncertainty of how this context continues.he added.
Labat reiterated that in 2022 inflation will be above the target range and that the uncertainty is such that it is not easy to give a number. The head of the BCU recalled that inflation expectations are unanchored and that is why monetary policy was “tightened”. In that sense, he argued that the situation “slows down” the anti-inflationary policy, but that does not lead to “losing the north.” “Monetary policy will continue to do its homework”said.
