Fynsa
It could hardly be argued that there is still a long way to go to return to normal inflation, as is happening in other economies.
No correction has been observed so far in the equity market, despite technical indicators that the market is overbought and at all-time highs.
January's inflation surprised to the upside, but we must remember that a new basket for measuring inflation debuted, along with a new base 2023 = 100, which additionally incorporated methodological changes and improvements.
The December CPI surprised the market with a 0.5% m/m drop; in this scenario we believe there is room for 100bp cuts or even a 125bp run.
The data indicate that we appear to be reaching the peak of this tightening cycle, as highly restrictive financial and credit conditions will begin to be felt more strongly in activity in the coming quarters.
We can expect a good return on issuers of adequate credit quality.
The market for this key fuel for the economy faces restrictions.
Any of the last 3 months of core inflation in the U.S. has been the softest reading since September 2021.
For the Central Bank, the pace of future interest rate cuts is not tied to the magnitude of the first one, thus relativizing the urgency to migrate quickly to a neutral level.
