Fynsa
We maintain our expectation that any changes to the TPM will likely not occur until September.
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%.
Core inflation is leaning in a more comfortable direction, so it would be reasonable to conclude that the Fed could adopt a wait-and-see approach at its next meeting, effectively ending the tightening cycle.
The CPI for February was negative, but when we calculate price changes excluding the most volatile items—which saw the sharpest declines—we find that inflation is still here.
We continue to recommend increasing the weighting of assets that are less sensitive to interest rates, such as cash, value stocks, international stocks, and real assets.
The main question the market is asking after the January CPI is whether this surprise puts the decline in inflation at risk.
As usual, I wanted to summarize our main projections for 2023, at the risk of being overcharged in twelve months' time.
The data clearly showed us that inflation is far from ceasing to be a problem.
The risk of reducing the MPR and then having to reverse it due to a misreading of the information is much higher than leaving it at 11.25% for longer than appropriate.
