The findings of the Market Expectations Survey (Relevamiento de Expectativas de Mercado, REM) performed by the BCRA were released in the past week. The following table shows the results:
| Inflation index | Term | Date of survey | Change | |
|---|---|---|---|---|
| Oct-16 | Sep-16 | |||
| Headline CPI – Greater Buenos Aires | Next 12 months | 19.8 | 21.3 | -1.5 |
| 2017 | 19.7 | 20.0 | -0.3 | |
| Core CPI – Greater Buenos Aires | Next 12 months | 19.0 | 19.0 | -1.0 |
| 2017 | 17.4 | 17.7 | -.03 | |
Inflation expectations for the coming year declined slightly. In addition, a larger reduction was observed in 12-month expectations. This is partly due to the fact that the temporary increase in inflation in October related to the price of gas is now behind us. Such increase did not change inflation expectations for the last two-month period of the year.
Estimates and high-frequency indicators from public and private sources monitored by the BCRA suggest, for November, an evolution that is in line with the disinflation path set by the monetary authority.
In this context, the BCRA decided to decrease the benchmark interest rate of 35-day LEBACs by 50 basis points to 26.25%. Moreover, as part of the transition to the 7-day repo rate as the benchmark rate that will occur in January, the BCRA decided to align the center of the interest rate corridor at the same value (26.25%) for both overnight and 7 days repos. The width of the overnight repo corridor will be 800 b.p. (22.25% for reverse repos and 30.25% for repos), and in the case of 7-day repos, it will be 700 b.p. (22.75% and 29.75%, respectively).
The BCRA will continue to take anti-inflationary measures to ensure a sustained disinflationary process to achieve the objective for this year (1.5% monthly inflation rate or lower in the last months), and a decreasing trend of inflation expectations for 2017.
