(Adds quotes from Sturzenegger, details on Argentina inflation, salary negotiations)
BUENOS AIRES, Feb 23 (Reuters) - Argentina’s central bank chief Federico Sturzenegger said on Thursday that salary hikes for some unions in 2017 that may be above its 17 percent maximum inflation target would not threaten achieving that goal for the year.
Sturzenegger said he did not see room to relax monetary policy at the moment, however, noting that the three months from February through April would be “more delicate in terms of inflation.” The central bank has held its policy rate steady at 24.75 percent for 12 straight weeks.
In the coming months, increases in regulated prices would impact the overall consumer price index more than the bank had been experiencing previously, Sturzenegger said, reiterating the bank’s target for inflation between 12 percent and 17 percent in 2017.
“Due to this, but also because the 1.2 percent-1.3 percent pace of monthly increases in non-regulated prices since November is too high for what we’re aiming for this year, we don’t see any room at the moment for relaxing monetary policy,” Sturzenegger said.
President Mauricio Macri’s government has in recent months announced subsidy cuts for several public services, including electricity and transportation, helping reduce the fiscal deficit but resulting in higher consumer prices.
Inflation last year totaled 40 percent, and many of Argentina’s powerful unions are currently negotiating salary increases with employers to try to recoup purchasing power lost last year and avoid real salary losses this year.
Sturzenegger said salary hikes “slightly above” the central bank’s target range would not compromise the monetary authority’s ability to comply with its goal. He said current-year salary increases should not be analyzed without considering the path of inflation last year.
“For now, we see the process of wage negotiations coming along in large part aligned with the institution’s inflation goals,” Sturzenegger said.
The bankers’ union negotiated a wage increase of 24.3 percent last week, while the Buenos Aires province teachers union, which is demanding a 35 percent increase, is at an impasse with the government, which wants to raise salaries by 18 percent. The two unions are seen as bellwethers for the private and public sectors, respectively.
In a statement earlier this week, the central bank had said inflation in February would be higher than in previous months. (Reporting by Luc Cohen; Editing by Chizu Nomiyama)