Fynsa
Recently, the nominees for the 95th Academy Awards, better known as the Oscars, were announced.. Once again, the lists are dominated by films produced by and for streaming companies, which for some time now have been standing out for their quality. Among them, one of the surprises was the Netflix-produced feature film "All Quiet on the Front Lines" (Im Westen nichts Neuesthe original German title), with nine nominations, including Best Film, Best Foreign Film and Best Adapted Screenplay.. This, the first film adaptation of the 1929 book of the same name, portrays the story of a group of young Germans who enlist in the army to fight in World War I, whose initial enthusiasm fades when the reality of war appears unceremoniously.
Although in a less cinematic and definitely less warlike tone, there was not much news on the monetary front eitherThere was also little news on the monetary front after the last monetary policy meeting of our Central Bank. The rate, as widely expected (although with some slippages), remained at 11.25%, a decision that was taken unanimously by the board members. Among the reasons outlined, there are not many surprises, although we would like to highlight two important points.
First of all, the external scenario, both economically and financially, is, at the margin, better. However, the medium and long-term outlook, as well as the challenges and risks, has not changed. This means that the world will grow less, inflation will remain high but declining and benchmark rates, on average, will continue to rise. Therefore, variations in financial assets or expectations in the short term must be carefully evaluated to determine whether they are trend changes or simply corrections.
Second, for a variety of reasons, the peso has appreciated. This is not only against the dollar, but also against comparable currencies; in nominal and real terms. To put it in numbers, our estimate is that today the real exchange rate is slightly above 99 points, which is lower than the 5-year average and only 3 points above the 10-year average. The Central Bank considers this to be of utmost importance, so much so that it mentions that its implications will be evaluated in the next IpoM. Those could be, as is obvious, aimed at less external inflationary pressures, but also at less capacity to resolve other macro imbalances, such as, for example, the current account deficit. Which of these is more important will directly determine the next steps in monetary policy.
Finally, it is mentioned that monetary policy has indeed favored the correction of misalignments, so there is a positive assessment of what has been done so far. In our view, it is still insufficient and the data needed to make a more complete one will not be available (unless there is a brutal tightening) for the April meeting. I mention this because the market expects adjustments to the TPM to begin there, while we expect it to be later, perhaps in June or July. Let's see if, at that date, we have news on the front end.
