The results of the Market Expectation Survey (REM) conducted by the Central Bank of Argentina (BCRA) were published last week, the results of which are shown in the table below.
| Inflation Index | Term | Survey Date | Variation | |
|---|---|---|---|---|
| Oct-16 | Sep-16 | |||
| General Level CPI – GBA | Next 12 months | 19,8 | 21,3 | -1,5 |
| 2017 | 19,7 | 20,0 | -0,3 | |
| Core CPI – GBA | Next 12 months | 19,0 | 19,0 | -1,0 |
| 2017 | 17,4 | 17,7 | -,03 | |
Inflation expectations for next year fell slightly. In addition, a larger reduction was observed in the 12-month expectations, due, in part, to the transitory increase in inflation in October associated with the price of gas. This increase also did not change inflation expectations for the last two months of the year.
The estimates and high-frequency indicators from state and private sources monitored by the Central Bank suggest, for the month of November, an evolution in line with the disinflation path foreseen by the monetary authority.
In this context, the BCRA decided to lower its reference rate for 35-day LEBACs by 50 basis points, to 26.25%. In turn, as part of the transition to the 7-day repo rate as a reference rate, which will occur in January, the BCRA decided to align the center of the repo corridor to the same value, of 26.25%, for both 1 and 7 days. In the case of 1-day repos, the width of the corridor will be 800 basis points (22.25% for passive repos and 30.25% for active repos) and in the case of 7-day repos it will be 700 points (22.75% and 29.75% respectively).
The BCRA will continue to maintain a clear anti-inflationary bias to ensure that the disinflation process continues towards its target for this year of a monthly inflation of 1.5% or lower in the last months of the year and that inflation expectations for 2017 continue to decline.
