Publications

Treasury yields look to have stalled after July’s surge. It seems that softer-than-expected July data left markets hesitant to take a strong directional view before August inflation and employment figures arrive.

By reiterating that “it will be appropriate to maintain the reference rate at its current level” and that the current stance is “well-suited” to the macroeconomic environment, the Board signaled that it is comfortable with the policy rate at its current level.

Today’s 9-3 voting split at the Fed suggests that support for monetary policy tightening has continued to grow within the Committee. The next policy decision will largely depend on whether upcoming inflation data validate the recent improvement in inflation.

The Fed is set to keep the fed funds rate target range unchanged at 3.50-3.75% this week. Chair Warsh will likely reinforce the FOMC’s hawkish lean by pointing to the AI investment boom as a potential source of demand-driven inflation.

BCRP kept its policy rate at 4.25% for a tenth straight month, in line with expectations. Headline (4.0%) and core (4.5%) inflation remain above target, and the statement points to somewhat slower convergence. We do not rule out a policy rate adjustment in the coming months.

Banco de la República raised its policy rate by 75 basis points to 12.0%. The decision was split, with four Board members voting in favor of the increase, two supporting a 50-basis-point rate cut, and one voting to keep the policy rate unchanged

The Eurozone and the United States are facing inflationary pressures that extend beyond energy, forcing the ECB and the Fed to raise their inflation forecasts. The central banks are shifting their course with varying degrees of determination.