Former Economy Minister Domingo Cavallo stated that a sharp decrease in the monthly inflation rate is expected according to data that INDEC will publish in February. He reported that the average monthly online price rate has been 1.4%, with a notable reduction since mid-December, when it exceeded 3%. It is expected that the gap between financial and official exchange rates will increase, due to a 20% drop in export revenues and an increase in demand for non-essential imports.
Regarding the foreign exchange market, Cavallo advised President Javier Milei to eliminate the blend dollar and increase tax incentives for exports. He also proposed that capital intended for foreign investments enter through the CCL market. The former minister suggested that net reserves could strengthen by allowing capital for direct foreign investments to enter through the CCL market.
Cavallo highlighted an improvement in prices, detailing that the monthly inflation rate measured daily by online prices dropped from 3% in mid-December to 1.4% at the end of January. This significant reduction has been reflected in the CPI data as official and alternative measurements have aligned since October, indicating a general decline in prices.
The former official also recommended measures to increase monetary reserves, such as channeling all foreign currency from exports to the Central Bank, granting more tax benefits to the exporting sector, and reducing taxes on agriculture and regional productions. Additionally, he suggested redirecting tourism operations and international purchases to alternative markets to strengthen reserves.
Cavallo projected that the gap between the CCL exchange rate and the official rate will increase, as 20% of export revenues will not enter that market. He also anticipated that the next inflation report from INDEC could confirm the downward trend, as since October there has been an alignment between official and alternative measurements, indicating a deceleration in prices.
