Inflation returned within the target range

Summary

In August inflation was negative at 0.09%, lower than anticipated (BBVAe: + 0.04%; Consensus: + 0.20%). With this result, YoY inflation is located at 2.7% and returns into the target range after eight months. We expect that in the short term inflation will remain within range and will close the year near its upper limit. Despite this reduced tension on the price side, we expect that at the next monetary policy meeting, the central bank will keep the policy rate at its current level of 3.75%: first, preliminary economic activity information for July suggests a rebound in growth, and secondly, due to the large deficit in the current account of the balance of payments.

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