Behind the scenes at the meeting where Massa got angry about runaway inflation

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The midday sun warmed the windows of the Ministry of Economy terrace. The climate was long-snouted and Sergio Massa went straight to the point as head of the table: “No room for convicts or bullshit”. He was referring to the need to lower the level of open disputes in the governing coalition, but he also revealed his concern for the tremor left by the latest currency run and April’s inflation jump.

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After the CPI hit a 8.4% last month and the alarms went off again, the Minister of Economy activated the “protocol” emergency: he started his day early on Saturday morning with private meetings, continued with Zoom chats with investors and from noon to 6 pm he locked himself up with the entire economic team to discuss the measures introduced this Sunday morning.

“AND bad inflation data, we need to go on the offensive with a battery of measures.” The market is expecting something equal or more negative for May, so analysts are having a hard time printing a change in expectations.

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During the summit, Massa asked the 14 officials present to report, He asked for explanations and also for proposals. The Deputy Minister, Gabriel Rubinstein, attributed the increase to “seasonal” products, especially food, although he acknowledged that “core” (non-seasonal or regulated) inflation accelerated to 8.4%, and pointed to “preemptive increases” due to the dollar’s leap, which brought the blue $404 to $474 current.

Matías Tombolini (Commerce), Marco Lavagna (Indec) and Guillermo Michel (Customs) called to control the “microeconomics”, especially to importers who have access to the official dollar, but who use the parallel to set prices. From the triad was born the idea of ​​creating a coordination unit -another- to create an “online” tool that allows you to intervene, for example in the food and textile sectors. Nobody targeted the IMF, as Máximo Kirchner did in the middle of the bullfight.

The explanation of the currency and financial scenario was given by the head of the Central Bank, Miguel Pesce, one of those who sat next to Massa. The entity closed on Friday with Purchases of 101 million dollars in the foreign exchange market, the highest level in 20 days, thanks to the restrictions established on the same day for the payment of imports. The almost immediate reaction wasn’t extravagant: The last time inflation picked up in March, markets soared on Monday.

In this picture, Saturday the increase of the fixed-term rate to 97% nominal per annum was defined, a move which was opposed by Pesce in April. Then came the bullfight and a new scheme, with Lisandro Cleri – the man from Massa – influencing the decisions of the BCRA money desk and the bond market. The new rate again reflects that the priority is to stabilize the dollar, despite La Cámpora’s claims on the level of activity. The minister was clear: “the situation is delicate”.

The other decision made was to “manage” the daily devaluation rate of the wholesale dollar, which has generated more doubts than certainties on the acceleration or slowdown of the official exchange rate, as has happened in the last two weeks. Furthermore, greater intervention on the financial market (CCL and MEP) was agreed and the threat of opening food imports from the Central Market was brandished, measures that could be left half-finished since they require something missing as a condition: dollars.

Thus, the meeting made it clear that the main bet still stands the negotiation of the advance of IMF disbursementsthe renewal of the swap with China and the financing with Brazil. Lavagna and Madcur (chief of cabinet) reviewed. The intention is to travel to the United States in late May and early June, and almost simultaneously Massa will visit Beijing to promote BRICS support for Brazil’s financing and expand the use of the yuan in foreign trade, something is still ongoing limited by controls.

Source: Clarin

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