Monetary policy will set the tone for the week, with inflation and Fed on investors' radar - BiticaNews


Monetary policy will be the agenda for the week, with the release of the IPCA-15 tomorrow (24th) and the minutes of the Fomc on Wednesday (25th). Both data could increase market volatility due to investor concerns about the possibility of the US going into recession, and the reason that leads to this expectation: inflation.

Other data refer to economic activity, with the release of the April Caged, which should show the sustainability of the labor market in the second quarter, as well as PMI data for the Euro Zone, which should strengthen the prospects that the interest rate hikes in Europe will begin in July against the backdrop of inflation in European countries.

Starting with the release of the May inflation preview, the indicator should bring the rate deceleration compared to April, when it reached 1.73% with the market expected of 0.45%.

The main reason to observe less pressured inflation will be the electricity tariff; after the change in the tariff flag in April, the weekly inflation indicators have already reflected less pressure on the consumption basket.

Less diffused inflation in Brazil

Still on the IPCA-15, it is expected to observe a reduction in the diffusion index as well as in the measure of underlying inflation, important for the Central Bank's decision regarding the next steps of the Selic.

Based on the analysis and expectations of these indicators, the terminal interest rate is expected to be observed in June, with the expectation of another increase of 0.50 percentage point, reaching 13.25% per year.

For the American economy, even though the latest data, such as retail sales, indicate that consumption continues to be heated, it is expected that concerns about inflation observed in the country will be noted in the minutes, referring to the Fed's latest interest rate decision. in recent months, the main risks of an inflationary process and its impacts on consumption over the coming months.

Thus, the monetary agenda is what should dictate the mood of the markets this week and its disclosures and results will dictate the next steps of central banks throughout the year, which directly influence the decisions and strategies of every investor.

*Fernanda Mansano has a master's degree in economics with more than 10 years' experience in the financial market, passing through financial institutions and the Brazilian stock exchange. She is currently Chief Economist at Empiricus.

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