Fynsa
Prudence indicates that we should wait for the end of the rate hike cycle to return to investing, but beware that time deposits no longer pay what they did a few months ago and inflation is also falling.
The Central Bank will remain steadfast in its goal of propping up inflation towards its two-year target of 3%, and until that happens, it will not begin to reduce the monetary policy rate.
In the short term, the good news should continue: for May we expect the CPI to increase 0.2% with respect to April, which would bring the year-on-year variation to 8.8%.
The Central Bank's constitutional mandate is inflation; therefore, its measures should be aimed at achieving that objective and no other.
Of concern is what is happening with core inflation, which rose 1.6% in March.
The credibility of a Central Bank is also at stake by doing what makes the most sense for the economy depending on the circumstances.
Financial concerns have subsided, but there are new fronts in the political and corporate governance arenas.
Adjustment will continue and a reduction in domestic demand is a necessary condition to reduce inflation and bring the current account deficit to more sustainable levels.
The Central Bank decided to keep the rate at 11.25. The question now is when there will be news on this front.
Higher interest rates put pressure on valuations during 2022, but the focus will now shift from valuations to corporate earnings in an increasingly challenging macro environment.
