However, as we discussed last week, it would be very important that the BCU would be prepared to inject more liquidity into the square. That is a possibility that the minister said Lorenzo and reinforced well with Buonomo comments. But that would be eventually a significant change in monetary policy.
JAE
actually explain it because the economy minister, Fernando Lorenzo, said Tuesday that the idea, but gave no details, is that as they are cancelingdebts that issued the renewal BCU will be partial. That is, by that I saw to having partial replacement of debt are pouring dollars into the square.
PR
Yes, and pointed out that spring is finally a BCU. The issue is this: an increase in liquidity in the plaza would first of all a change in the tone of mone tary policy sign would take a more expansive. That could be implemented at least two ways: at the next meeting of the monetary policy committee BCU will be the 24th of June, the bank may announce a newr an abandonment of the interest rate for the BCU significantly increase the liquidity to give more support to the dollar. If the BCU stop announcing a target for the interest rate would be much freer hand to pursue an exchange rate target by buying dollars and pumping liquidity into the square.
JAE
mean that it will take probably the Monetary Policy Committee (COPOM) if you are going in this direction or not.
PR
presume to wait until 24 dand June.
JAE
Now, what would the inflationary impact of further monetary expansion,
that is a warning that you have done, how it would impact such a higher dollar in terms of inflation, which is a concern?
PR That depends on how monetary policy will eventually change, and how much ends up l dollar. For now, in our view, is too hasty venture
4 to
6% in annual terms. This objective is more demanding than what we have for this year is going to
3 to
7%. Analysts estimate that inflation in 2011 will be slightly above 6%. A survey conducted among more than 120 companies, between February and March, inflation stood well above 6% for 2011. With a potentially more expansive policy on the monetary front would have to think of any upward revision of forecasts of agents.
This does not necessarily mean that it will not comply with the goal but the government is going to have to live with exoperate in a sufficiently bio compensatory and timely, the external shocks that receives our economy. So in general we tend to think the importance of maintaining a reasonable degree of floating exchange rates.
