The continuation of the rebalancing between savings and investment will be a decisive factor in this result. Deficits of similar magnitude are expected for 2024 and 2025. The projected evolution of the economy over the next three years underscores the need to resolve the imbalances accumulated in years past. Consumption has reached very high levels by historical standards, at the same time that national savings have fallen sharply and the current-account deficit has widened further. Regarding monetary policy, we believe that it will be necessary to maintain the MPR at 11.25 percent until the state of the macroeconomy indicates that the process of inflation convergence to the 3% target has been consolidated. According to the central scenario of this MP Report, this will take longer than we assumed in December. In order to consolidate the convergence of inflation, among other factors, consideration should be given to resolving the imbalances that have affected the economy in recent years, including a significant slowdown in consumption, the output gap moves toward negative values, and core inflation takes a clearly downward trend. The MPR corridor describes an area containing the most likely movements for the Monetary Policy Rate, which envelops the central scenario I have just described and the sensitivities around it. Its borders reflect sensitivity scenarios where the speed of the inflationary convergence process gives way to earlier or later adjustments of the rate with respect to the central scenario.
5/7  BIS central bankers' speeches  Trade has been facing a combination of structural and cyclical headwinds since the global financial crisis: The global merchandise trade-to-income ratio has stagnated since 2010. China’s imports of intermediate goods is growing at below 10%, compared to more than 20% in the early 2000s, creating a drag along supply chains across Asia. This is partly cyclical, reflecting slower growth in China. But it is also structural – reflecting a reconfiguration of supply chains and China’s increasing insourcing of intermediate inputs. As if these cyclical and structural headwinds are not enough, we are now facing the uncertain prospect of policy measures against free trade, especially in the US. There is talk of: rejecting TPP and re-negotiating or even repealing NAFTA and other FTAs; imposing a border tax adjustment that would in effect impose the corporate tax rate on imports; and labelling major trade partners as currency manipulators and imposing hefty tariffs on them. Some of these actions may well attract retaliatory measures, leading to trade conflicts with disastrous consequences for the global economy. In all likelihood, it may not be that bad. The contours of the incoming US Administration’s trade policies are highly uncertain. There remains within various arms of the US establishment a strong belief in the benefits of an open global trading system and the risks of punitive trade restrictions. But there could be some limited anti-trade measures such as targeted tariffs on selected products or industries.