Santander Corporate & Investment | There are no divisions here, inflation data are undoubtedly starting to look more erratic after the first big downward adjustments at the end of 2022, falls that raised hopes of a pivotal moment for central banks and explained a large part of the unprecedented January rally in the markets. Base effects will be the main ally for much of 2023, but our economists believe that in the short term we will not see major declines yet. Moreover, they warn about how sticky some of the inflation is (and possible contagion), especially in housing and services. And they do not believe that yesterday’s January US data, still in line with expectations (0.5% m/m vs 0.5%e), will change the Fed’s flight plan. In fact, the market yesterday moved very fast discounting a terminal rate already close to 5.5% in July (5.25% expected by our economists), while the anticipated fed funds’ 2H23 pre-payrolls declines have already disappeared. Something that also pushed the European market, especially after Makhlouf’s comments pointing to a terminal rate of 3.5% (Santander 3.25%e).