Publications

Global uncertainty, especially on geopolitical and commercial issues, has been creating a complex and atypical environment for Latin America in 2025. This has led to high market volatility, caution from monetary policy, and broader than normal ranges when forecasting economic variables.

The Bank of the Republic maintained the policy rate at 9.25% in June, with a divided decision. While inflation showed a marginal reduction and growth continues a gradual recovery, they emphasized the larger estimated fiscal deficit and its effect on the economy and the Bank's interest rate profile.

Mid- and long-term Treasury yields have pulled back from last month’s highs amid soft inflation prints and dovish signals from Fed officials like Bowman and Waller, who have voiced support for a July rate cut.

Argentina’s economy kept recovering in Q2 2025, driven by fiscal order, a re-monetization strategy, and a flexible exchange rate scheme. The outlook is still shaped by the electoral context and the challenge of ensuring lasting stability in a volatile global environment.

The CBRT kept the policy rate (one-week repo, 46%) and the width of the interest rate corridor (44.5%-49%) the same, surprising the market expectation of a cut in the upper bound of the corridor.

While directionally consistent with our expectations, the SEP adjustments (higher inflation, weaker growth, and a slightly higher unemployment rate) were not sufficient to alter the median fed funds rate projection for end-2025, which remains at 3.9% (two cuts).

While signals on how the Fed now assesses the evolution of risks to its goals will draw significant attention, all eyes will be on the dot plot to see whether a majority still favors at least one rate cut this year.

At its June meeting, the Central Bank’s Board decided to keep the policy rate unchanged at 4.50%. The monetary policy stance, measured by the ex-ante real reference rate, remains around neutral.