Beker: "Use only the rate to fight inflation, it is want to kill an elephant with a 22 caliber"

Against a background of quieter exchange rate, inflation is again the urgent economic issue. The predictions of a 30% price hike ignite the alarms of economists. In this context, Víctor Beker director of the Center for Studies on the New Economy (CENE) of the University of Belgrano pointed out the high interest rates . With high inflation, like Argentina, inflation is a multi-causal phenomenon: the monetary, non-monetary and inertial components are usually mixed. The success of any anti-inflation strategy requires a comprehensive approach that tackles all inflationary factors. "The economist in the latest report released by the aforementioned study house.

According to the CENE report, the inflation targeting system failed because it was not "credible" and, therefore, "was not used to anchor the expectations of agents

In this context, Beker himself pointed out that "using only the interest rate to fight against inflation amounts to wanting to kill an elephant with a caliber pistol. 22 " .The economist argued:" It is that the weight of goods subject to international trade in the average consumption basket is less than 50%: the rest is non-tradable goods. "

For the time being, the Director of the CENE emphasized the credibility of s inflation targets, especially after the already fateful 28-D . "If goals are to function according to expectations, they must be credible, and only then can they serve to anchor the expectations of economic agents." As can be seen, none of the success conditions of an anti-inflationary system has been verified in the last two years. It's not surprising that the failure was the result "," Beker said.

Similarly, the economist considered that "the targeting system of inflation badumes that inflation is a purely monetary phenomenon and"

In addition, Beker considered that " the second hypothesis is that the interest rate is the appropriate channel for transmitting monetary policy, the third hypothesis is that nominal prices are flexible upwards and downwards. "

" Therefore , the treatment of the interest rate as an anti-inflationary tool has, in the best of cases, an impact on less than half of the goods consumed " claimed the economist.

He added that "the rare development The financial situation of Argentina, where the ratio credit / deposits / GDP is very low, makes low or no interest rate efficiency in as a transmission channel of monetary policy.The interest rate is only the opportunity cost of holding dollars and only functions on the foreign exchange market. "