Fynsa
Speeches and communications from the Central Bank Board have only been along one line: it is still too early, risks are high and policy error can be very costly.
We maintain our expectation that any changes to the TPM will likely not occur until September.
The adjustment will continue, and a reduction in domestic demand is a necessary condition for lowering inflation and bringing the current account deficit down to more sustainable levels.
The Central Bank decided to keep the rate at 11.25. The question now is when there will be any developments on that front.
The important question that arises with respect to the Central Bank's policy is how long monetary tightening will be on hold.
We must not forget that, once the immediate imbalances have been resolved, our economy’s growth potential is very low.
You may say I am a dreamer: economic policies work and eventually we will return to equilibrium. It's not free, though, like nothing else in life.
The Central Bank decided to raise the rate to the highest level of this cycle, which eventually led to disagreement among the board members.
The outcome of the plebiscite should have a positive impact on the markets, under the assumption of lower uncertainty and risk premiums in the future due to the expectation of a more moderate new constitution.
For the fourth consecutive time, the Central Bank modified the bias of the statement, repeating the situation of March and May: a bias that indicated an early end to the hiking cycle, and then eliminated it and raised the rate more than expected.
