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Tablero de Mercado Noviembre 2017

Resumen del mercado financiero local e internacional para el mes de Octubre 2017.

 

 

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Midweek 3 de Enero de 2018

2018 has started with a plenty of news in the economic front.  The most relevant to financial markets was the amendment of inflation targets. The review included the postponement by one year of the 5% annual inflation goal from 2019 to 2020 and the change of the 2018 target from 10% ±2% to a specific 15% guideline. The Central Bank cut Lebac rates in the secondary market by 200 to 300 bps to return to a negative yield curve. The rise in targets is justified as prior goals were not credible and were perceived as unattainable given the low probability of meeting them. The monetary relaxation looks for a better coordination with the fiscal policy and aims to reduce the risk of an economic slowdown.  Nonetheless, the regulator keeps it contractionary bias but at a lower intensity.  We foresee the Central Bank will lower the monetary policy rate at its next meeting to align it to the Lebac rate. The movement will bring it to 26.75% next week, and then we anticipate it will pause further cuts until April to assess the impact on CPI of wage negotiations with unions and the ongoing hikes in regulated prices. We modified our 2018 year end monetary policy rate projection from 18.75% to 21.50%. The marginal relaxation of monetary policy will support inflation (especially through expectations) in the medium run and future cuts will be much more gradual than we established before.