Fynsa
I have just returned from a wonderful trip. Over a year ago, during one of the most challenging moments of the pandemic, with total lockdowns, permits even to go out to buy bread, unable to visit family or friends, I needed a project that would allow me (and us) to escape a little from the difficult reality we were going through. So, in an unprecedented move, I signed up for the Ironman 70.3 in Hawaii. At that time, the borders were closed, I had luckily received my first dose of the vaccine, no mass sporting events were being held, and I had not yet made my triathlon debut. That's how risky, irrational, and challenging my plan was, but I must admit that it gave purpose to many things that were happening at the time.
I shared my madness with some friends and I was very surprised when many of them started following me, sending screenshots of their registrations. The matter went beyond my circle, a WhatsApp group was created, and people from other teams and other cities began to join, all with the same need to do something unusual in such a difficult context (more information on this here). After many twists and turns, the year passed and it was time to face the competition. My plan was to reduce the elusive 6 hours, and I felt quite prepared for that, after a lot of training, nutritional plans, mental work, and experience from other races. I did everything according to plan, all my efforts were in line with that, I felt strong, and yet I had the worst time I've ever had at that distance. Why did that happen? Basically because I focused on everything I could control and had to accept what I couldn't: a headwind while swimming, wind and three different weather conditions while cycling, and scorching heat while running, etc.
Well, that's a nice story, but what does this have to do with economics? You came here to read about that, right? Well, despite being on a family vacation, after about six years without taking one, in an earthly paradise, my professional bias did not prevent me from me from keeping an eye on local and global economic developments, which over the last two weeks have focused on the actions of central banks, the fight against inflation, and the possibility of the major economies entering recession. Consumer prices continue to rise, supply constraints are not improving, and monetary policy is struggling to keep inflation under control.
My impression is that the work that central banks are doing now has little to do with controlling current inflation, or even inflation over the next 12 months. I would go even further and say that they may not even be able to do so with regard to the two-year variation, which for many is the primary objective. As I understood from the Fed's statement, the press conference, and the projections, the Federal Reserve is currently fighting against expectations, since, in one way or another, this is the only thing it seems to be able to control (or attempt to control) given the current macroeconomic conditions . Our Central Bank faces a similar situation, as I mentioned in this same space a few weeks ago. Faced with swimming against the tide or the scorching heat, there is nothing I can do, just as monetary policy can do little to control supply problems, the armed conflict in Europe or lockdowns caused by the zero-COVID policy, which are the main causes of current inflation (I am generalizing, of course, as the interference is greater in some countries and less in others). But it can act today to maintain its credibility tomorrow, raising rates, surprising the market, and telling it that it will do everything possible to meet its targets within the relevant timeframes. Expectations in the US and Chile for two-year inflation are above 2% and 3%, respectively, measured using different instruments. If this situation continues and begins to permeate not only financial assets but also people's daily decisions on contracts, adjustments, etc., decoupling will not be a problem for inflation today, but much more serious for tomorrow's inflation. And it seems that this is the only career plan that central banks can execute today, ignoring (a little) contemporary price variations. Just like me, who was happy even though I did 44 minutes more than I had planned.
