I disagree with my colleagues on Tombini´s
talk. I notice two new signs. First, the Governor did not say a word about “inflation
persistence”, which was the main reason to keep the pace of 50 bps in Copom´s January
meeting. And he hemmed and hawed about the timetable of IPCA convergence to the
target of 4.5%, shedding light on an alternative CPI index --- IPC-Fipe, which
shows inflation at 3.7% in February, against 5.59% of IPCA). It´s hard to
imagine dovisher signs.
That said, in the absence of another adverse inflation
surprise (February IPCA-15 will be published this Friday), I expect a hike of
25 bps, and a last movement of the same size at the next meeting. In other
words, three alternative diagnoses and only one conclusion!
He did not mention the increase in long rates and tightening in external financial conditions?
ReplyDeleteI don´t remember any comment about this.
DeleteBut shouldn't he also consider this in his analysis? We have real rates equal to the beginning of 2009, in that time inflation fell from 5.8% to 4.3%, I know that labor market is tighter, administrative prices are artificially low but the growth rate will decrease sharply, shouldn't this be another reason to be more cautious?
ReplyDeleteSamer, if you mean dovisher, yes, I agree with you.
ReplyDeleteYes, I meant dovisher (cautious to increase rates more)
ReplyDelete