Fynsa
The Central Bank published its March Monetary Policy Report (IPoM), in which it updates its macroeconomic scenario and provides guidelines for the future conduct of monetary policy. Although there are other reports of the same nature prepared by various institutions, the IPoM is the "influencer" of the monetary policy.influencer"influencer to which the entire market is attentive.
There were several modifications on this occasion, some more expected than others. For example, and given the recent National Accounts figures for 2024 and the Imacec for January, the agency increased its growth projection from 1.5% - 2.5% to 1.75% - 2.75%, in response to a better starting point for 2025, thanks to higher exports, and a slight recovery in consumption, especially non-residents. This responds to a better starting point for 2025, thanks to higher exports, and a slight recovery of consumption, especially by non-residents. Remember our previous column in which we talked about the consumption of our Argentine neighbors? consumption of our Argentine neighbors? Well, just that.
In addition, for 2026 and 2027 it maintained the range of 1.5% - 2.5%, which speaks of the relatively transitory nature of the increase in the estimate for 2025.
On the inflationary front, although core inflation has evolved below expectations, volatile inflation has surprised, causing the year-end estimate to go from 3.6% to 3.8%. But beware, this does not mean that the Central Bank expects more inflation than it did in its previous report. This change is due to the fact that December's inflation was much lower than projected, modifying the basis of comparison for 2025. In fact, if we look at the estimated average inflation for the year (and not the end of the period), it is reduced from 4.6% to 4.4%. Despite this, the Issuer estimates that the price variation should converge to 3% at the beginning of 2026, both because of its dynamics and because of the high bases of comparison that it will face during the second part of the year, caused by the increases in electricity tariffs.
We do not think it is surprising to mention that the scenario faces high uncertainty, both due to international political-economic developments and to the various cost pressures experienced by the local economy. Thus, although the central scenario proposes a prolonged maintenance of the TPM at 5.0%, followed by a couple of cuts at the end of the year, the upper edge of the corridor incorporates three hikes in the event of a greater pass-through to final prices. Conversely, should the international scenario worsen local growth projections, the rate could fall faster, even below what would be considered a neutral level.
