has decided to raise the reference interest rate by 25 bps to 6.75%, thus continuing to normalize its monetary policy stance.
i. Year-on-year inflation decreased from 8.74% in July to 8.40% in August —above the target range— due to significant increases in international food and fuel prices. Core inflation fell from 5.44% in July to 5.39% in August —above the upper limit of the inflation target range.
ii. The significant increase in international food and fuel prices since the second half of last year, accentuated by international conflicts, has led to a sharp increase in global inflation in magnitudes not seen in many years and towards levels significantly higher than the inflation targets of central banks —both in advanced and other economies in the region.
iii. A downward trend in year-on-year inflation is forecast with a return to the target range in the second half of next year, due to a moderation of the impact of international food and fuel prices, and to a reduction in inflation expectations.
iv. One-year-ahead expected inflation decreased from 5.16 to 5.10% between July and August —above the upper limit of the inflation target range.
v. Several leading indicators and expectations for economic activity recovered in August, but most remain pessimistic.
vi. The outlook for global economic activity this year and the next has deteriorated due to the expected unwinding of stimulus in advanced economies, international conflicts, and persistent global supply bottlenecks, despite some improvement in recent months.
The Board is particularly attentive to new information on inflation and its determinants, including the evolution of inflation expectations and economic activity, to consider changes in the monetary stance. The Board reaffirms its commitment to adopt necessary actions to ensure the return of inflation to the target range over the forecast horizon.
The Board also decided the following interest rates on its window facility operations in domestic currency with financial entities:
i. Overnight deposits: 4.75% per year.
ii. Direct security/currency repo and rediscount operations: i) 7.25% per year for the first 10 operations in the last 3 months and ii) the interest rate set by the Monetary and Exchange Operations Committee for operations in addition to these 10 operations in the last 3 months.
In addition, the Monetary and Exchange Operations Committee may establish higher rates based on the amount of the operations.
The BCR Board's next monetary policy session will take place on October 6, 2022.