2025/10/24 | Diego Ciongo & Soledad Castagna
At today's monthly monetary policy meeting, the BCP kept the monetary policy rate at 6.00% for the nineteenth consecutive month, in line with our call and market expectations (according to the BCP’s survey).
The committee reaffirmed once again its commitment to price stability and will continue to closely monitor internal and external developments, to anticipate their possible implications on the path of inflation and take appropriate measures to ensure compliance with the 3.5% target over the monetary policy horizon. Therefore, we estimate that the real ex-ante policy rate remains at 2.5% (using expectations for the monetary policy horizon), compared to the BCP’s neutral real interest rate range of 1.3%-2.6%.
Furthermore, the committee highlighted that the economy had performed better than expected. The 2025 GDP growth forecast was revised up from 4.4% to 5.3% in the recent Monetary Policy Report. On inflation, the BCP maintained projections for 2025 and 2026, at 4.0% and 3.5% respectively.
Regarding the global context, the BCP noted that markets anticipate further cuts to the Federal Reserve's interest rate target range at upcoming meetings this year. As for commodities, oil prices declined slightly since the last meeting.
Our take: We forecast a policy rate of 6.00% through the end of 2025. The policy rate is already at the upper bound of the BCP’s neutral range in real ex-ante terms. Leading indicators suggest positive momentum in economic activity, while inflation expectations for the monetary policy horizon (18-24 months) remain stable. The next monthly monetary policy meeting is scheduled for November 21.