The Economist Carlos Melconian doubted that the government of Javier Milei can let inflation start at “0” sometime in 2026 and assumes the libertarian government will “use itself up” by promising single-digit annual price increases.
“There is no announcement from the government that says inflation will be zero and that is credible,” he explained in an interview with José Del Rio on LN+.
In doing so, he rejected the statements of Milei, who predicted in an interview with LN+ that inflation would start at 0 between June and August next year.
Melconian, former president of the Banco Nación during Mauricio Macri’s term, said we need to focus on the decline in economic activity and said the promise of further improvements in the pricing system undermines the government’s credibility.
“When Milei took over, banks were calling their customers to offer them loans. Today that doesn’t happen anymore,” Melconian said when asked if he feared his analysis was wrong. “This is the third time they have announced this (due to zero inflation),” he suggested in an interview with Del Rio.
In addition, the economist added that the Casa Rosada needs to accumulate reserves and that it is not against a gradual exchange rate system (like the bands) in a country “where the lack of dollars” is one of the main problems, as he claimed.
“All in all, inflation, if it stays as it is, is not bad at the same time as progress is made on other fronts,” he said.
“I would like inflation to be in the single digits, but I have always held to the philosophy that you have to be ready to start a program that will achieve single digits annually, and this government is not ready,” he said.
As the economist summed it up: “There probably won’t be single-digit annual inflation in this administration, but that’s not a bad thing as long as the other problems are solved: currency, exchange rate, activity levels, purchasing power and the distribution of the pie.”
On the other hand, he talked about labor and tax reform. “There will be no tax reform,” he explained.
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