- ‘No doubt’ economy will grow next year: Mario Quintana
- Central bank showing it has autonomy from government: Quintana
Argentina can meet its target of 17 percent inflation by the end of 2017 and has established the right conditions for the economy to rebound from a recession, according to Cabinet Secretary Mario Quintana.
Early data suggests monthly inflation in August will slow to near 1 percent and will continue below 2 percent for the rest of the year, Quintana, who coordinates the cabinet’s economic team, said in an interview on Radio La Red. Price surged as much 6.5 percent in April in Buenos Aires, the capital.
Since taking office in December, President Mauricio Macri has lifted currency controls and reduced subsidies on energy bills to narrow a large primary budget gap. The resulting devaluation of the peso caused annual inflation to accelerate to as high as 47 percent, while the central bank’s efforts to fight rising prices with interest rates as high as 38 percent exacerbated a recession that started in the second half of last year.
“A few months ago people thought we didn’t know how to manage this burden,” Quintana said. “I think that now we are proving that we do.”
Local media has interpreted contrasting comments by Finance Minister Alfonso Prat-Gay and central bank President Federico Sturzenegger as evidence of discord within the government. While Prat-Gay said on Aug. 29 that inflation is no longer an issue, Sturzenegger said it’s too early to call the slowdown a definitive trend. Quintana denied that there are any fights over the central bank’s reluctance to cut rates at a faster pace.
“When we’re talking about the interest rate, I see it as something positive, as evidence that for the first time in many years we have an autonomous central bank,” Quintana said. “It’s more important to have an autonomous central bank than 200 basis points here or there in the interest rate.”
After the Supreme Court ordered the government to roll back subsidy cuts on gas bills until it holds public hearings, Quintana said the rise in prices will be more gradual and that the previous increase limit of 400 percent will be lower.