We do not expect changes in the reference rate this year, as BCRA reinforced it is committed to its inflation targets.

Talk of the day 
Argentina

BCRA left the monetary policy rate unchanged at 26.25% in September, as was widely expected. In the press release announcing the decision, the monetary authority noted that while inflation expectations for 2017 remain at 22%, analysts have raised their inflation expectations for 2018 to 15.8% from 15.7%, according to the central bank’s latest survey. The high frequency indicators tracked by the monetary authority indicate the core inflation rate for the month of September will be higher than any of the figures registered since May (the lowest reading, 1.3% mom, came in June). Furthermore, the headline reading will likely be affected by adjustments to regulated prices. The same indicators show a deceleration in inflation in the first days of October. The central bank expressed discomfort with the current estimated level of core inflation, which in the third quarter was only slightly below than the average of the previous quarters (1.7% mom, 22.4% annualized).
All in all, the central bank is focused on bringing inflation down and into line with the target range for 2018 (10% ±2%). To that end, it will maintain its “anti-inflationary bias” (meaning a tight monetary policy). We do not expect changes in the reference rate this year, as the central bank has reiterated that it is committed to its ambitious inflation targets.