Quo vadis, monetary policy?

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Quo vadis, monetary policy?

Third week
October 2017

September’s national inflation (1.9%) was much higher than expected (1.4%). This did not occurred since the beginning of the year. Every time there is an “inflationary surprise”, monetary policy discussions become the center of attention again.

In addition, core inflation accelerated slightly in September and it was over the Central Bank’s most immediate targets. It has not shown any signs of systematically breaking up the 1.7% that it has been averaging for the last several months either. Besides, inflation expectations have been rising slowly despite the fact that the Central Bank raised its policy rate in April and did the same with the Lebacs rates at the end of August. This is a sensitive aspect as, in current circumstances, the impact of a rate increase via credit channel is very limited.