Fynsa
This week, at the April Monetary Policy Meeting, the Central Bank’s Board agreed to keep the monetary policy rate at 4.5% once again. The decision was adopted unanimously by its members, but we feel that something has changed…
Rising fuel prices will lead to higher inflation in the short term, but year-end forecasts will depend largely on how the conflict in the Middle East unfolds.
After roughly five years, inflation has fallen back below 3%. The current situation is not necessarily permanent, and both monetary and fiscal policy require constant work to meet their objectives.
More money does not generate more wealth; only efficiency and increased production will do so.
The CPI for December registered a monthly decline of -0.2%, falling below market expectations. With this, inflation closed 2025 at 3.5% annually, just above November's figure.
Inflation cannot be controlled with a magic wand; it is controlled by working every day to achieve this. Even when others do not cooperate.
The CPI rose 0.3% compared to the previous month, which was in line with our expectations, although slightly above market expectations. With this, the year-on-year variation remained at 3.4%, increasing expectations that the elusive 3.0% will soon be reached.
If the UF is banned, there is nothing to prevent contracts from being indexed based on the CPI variation of the previous month or readjusted a priori according to some estimate of future inflation plus a risk premium. How do we then ensure that families are not affected by the loss of purchasing power?
Between the closing of the June IPoM statistics and its publication, relevant geopolitical events occurred that could alter part of its assumptions. Market reaction and global uncertainty seem to reinforce an already complex context. Even so, the report remains valid.
The Central Bank adjusts its economic projections, but maintains a cautious approach to global risks that could alter its monetary policy strategy in the coming months.
