Fynsa
We maintain our expectation that possible movements in the TPM will have to wait 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 February CPI was negative but, when we calculate what happened to prices excluding those volatile ones that fell the most, we find that inflation is still here.
We continue to recommend overweighting less rate-sensitive assets such as cash, value sectors, international equities 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 showed that inflation is far from being 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.
