Good afternoon. We are presenting the Monetary Policy Report (IPOM) for the third quarter of 2026. I will first go over the main topics covered in the report. Vladimir will add his comments on the thematic sections in this edition, and then we will move on to your questions.
I. International context
The IPOM begins with an overview of the international context, and I believe one of our greatest domestic challenges is to incorporate greater consideration of international market trends within the decision-making process, particularly in an economy like ours, which was isolated from the rest of the world for such a long time.
The ongoing conflict in the Middle East, the main risk identified in the previous IPOM, once again shaped the agenda during the quarter. Transit through the Strait of Hormuz did not return to normal, and the conflict spread to the Red Sea, eliminating the relief valve that had moderated the initial impact. Oil inventories continued falling, and Europe is heading into the winter with low gas storage levels. Brent oil, which had averaged USD84 per barrel in June and July, climbed back above USD100 and is ending October at over USD113 per barrel. Futures prices for year-end 2026 place it at around USD97, compared with USD82 projected in the IPOM three months ago.
The BCRA’s Index of Commodity Prices was as much as 28% above its 2025 average in September, while grain prices—specifically soybeans, wheat, and corn—are likewise trading far above their levels from a year earlier.
This energy supply shock coincides with strong demand in advanced economies, supported in part by investment in artificial intelligence.
With higher energy and food prices, year-on-year inflation in nearly all countries now exceeds the pre-shock inflation rate, and 2026 inflation forecasts have been revised upward across the board.
Against this backdrop of higher global inflation, the Federal Reserve raised its monetary policy rate by 25 basis points in September, to 4%—the first increase since 2023—and removed from its statement the reference to supply shocks as a temporary source of inflation. This week, it left the rate unchanged.
Futures markets are pricing in between two and three additional rate increases over the coming year.
The European Central Bank and the Bank of Japan also raised their rates.
Although the yield on the 10-year US Treasury note has fallen back below 5% today, it rose above 5.3% in early October, reaching its highest level since 2002 (a record it had already broken in the second-quarter IPOM).
Elevated public sector financing needs worldwide, together with debt issuance by major technology companies to fund investment in artificial intelligence, are helping keep those yields above the levels to which we had become accustomed over the past two decades. Financial conditions for emerging economies have become more challenging, even though sovereign spreads remain at historically low levels.
Risks associated with the international context can be grouped into three areas:
- energy prices remaining elevated for longer, thus leading to higher global inflation and tighter monetary policies;
- international financial conditions tightening sharply; and
- global economic activity growing at a slower pace.
For central banks around the world, these risks would be more difficult to address than in previous episodes because inflation remains above target.
Governments also face greater constraints than in previous cycles when it comes to responding, given their high levels of public debt, more limited fiscal space, and rising interest rates that add to those constraints.
II. Local macroeconomic context
Against this adverse external backdrop, Argentina continued exhibiting a differentiated performance.
The floating exchange rate regime has once again acted as a buffer, facilitating the adjustment of relative prices without disruptions in domestic financial markets. The nominal exchange rate remained relatively stable during the quarter. The consistency of fiscal, monetary, and foreign exchange policies continues to be the foundation of that stability.
Economic activity
In the second quarter of 2026, GDP contracted by 0.6% relative to the first quarter in seasonally adjusted terms while expanding by 2.0% year-on-year. The quarterly contraction was driven by two anticipated factors: the normalization of agricultural activity following record wheat, corn, and sunflower harvests, and the effects of a less favorable external environment.
Meanwhile, exports continued driving growth, reaching a record high, as they increased by 2.5% on a seasonally adjusted basis during the quarter and 13.7% year-on-year.
The growth process rests on the right fundamentals.
During the third quarter, the pace of cumulative growth moderated once again, mainly due to transitory factors. In addition to the normalization of the agricultural sector, industrial facilities experienced disruptions in natural gas supply, owing to higher residential demand amid lower temperatures, as well as higher levels of rainfall and snowfall in certain regions.
These factors had a significant impact in July, while the level of economic activity stabilized in August. The outlook for September suggests that cyclical sectors may have begun to recover, leaving a positive carryover for the fourth quarter.
In the first eight months of the year, the economy grew by 1.2% compared with the same period in 2025. Export-oriented sectors—mining, agriculture, and fishing—recorded significant growth. The manufacturing sector, by contrast, is undergoing a process of transformation: the more competitive and export-oriented industries grew by 3.2% year-on-year and reached record levels, while industries that are more dependent on trade protection continued contracting.
A recovery in GDP is expected in the fourth quarter, as the statistical impact of agricultural activity normalizes and the transitory factors that affected July, particularly those related to natural gas dynamics, dissipate. GDP would grow for a second consecutive year in 2026.
Analysts participating in the Market Expectations Survey (REM) forecast annual growth of 1.5% for 2026, accelerating to 2.5% in 2027 and 3.0% in 2028, in line with estimates from the IMF and the World Bank.
The investment process continues gaining momentum. Twenty-seven projects have been approved so far under the Incentive Regime for Large Investments (RIGI), with USD76 billion in committed investment.
External sector and reserves
Export volumes over the past 12 months reached a new all-time high. Sustained growth in oil and lithium exports is the main structural driver. In the third quarter, this was further supported by agro-industrial export volumes associated with the record harvest and by higher international commodity prices. Against this backdrop, the current account of the balance of payments is estimated to have posted another surplus during the quarter, which would make it the third quarter with a current account surplus in the past four quarters. REM analysts forecast a trade surplus of USD25.7 billion for Argentina in 2026.
Public accounts and Treasury finances
The public accounts surplus continues to be the anchor of the program. In the third quarter, the non-financial national public sector recorded a cash-based primary surplus equivalent to 1.6% of seasonally adjusted and annualized GDP.
The Government submitted the 2027 budget bill, projecting a financial surplus for the fourth consecutive year, something not seen with full compliance with contractual obligations since 1993. For 2026, the market projects a primary surplus of 1.3% of GDP.
III. Prices
Regarding inflation, the third quarter showed the development we had anticipated.
Monthly inflation continued declining: the CPI averaged 1.9% per month between July and September, 0.3 percentage points lower than in the second quarter.
Most of the decline was concentrated in the Regulated Prices category, which averaged a 2.2% monthly increase, 0.9 percentage points lower than in the second quarter.
The most significant factor was the moderation in the Fuels and Lubricants category: after averaging 4.6% per month in the second quarter, amid the effects of the conflict in the Middle East, it slowed to just 0.8% per month in the third quarter. Other contributors included Education, Telephone and Internet Services, Private Health Insurance Expenses, and Electricity, Gas, and Other Fuels.
However, the most important thing is what underlying inflation indicators show. The underlying CPI calculated by the BCRA averaged 2% per month during the quarter, 0.1 percentage points below the second-quarter average and 0.3 percentage points below the average recorded during the first half of the year.
The decline in underlying inflation was concentrated in goods: underlying goods inflation slowed to 1.7% per month, reflecting a lower sensitivity to movements in the nominal exchange rate. Packaged food and non-alcoholic beverage items increased by 1.8% per month, 0.5 percentage points less than in the previous quarter. In turn, underlying services recorded a slight acceleration, rising to 2.7% per month.
This development confirms that the reduction in inflation is not only due to transitory factors: it rather reflects a widespread process attributable to the deep determinants of the macroeconomic regime. Inflation has not been this low in Argentina in ten years.
The fiscal and monetary anchors prevented second-round inflationary pressures from being validated. The pass-through of relative price shocks did not spread to the rest of the economy. And the low correlation between underlying goods inflation and fluctuations in the nominal exchange rate, a feature characteristic of more flexible exchange rate regimes, remains essential to the economy’s ability to absorb external shocks without those shocks translating into inflation.
It is important to clarify that the slight increase in the year-on-year inflation rate during the third quarter—0.5 percentage points higher than in the second quarter—is purely the result of a base effect.
For the fourth quarter, there is a renewed risk of factors that could place temporary upward pressure on inflation. Among them, the most significant is the unfavorable seasonality in beef prices, which tend to post sizable increases between November and December. This time, we expect increases to be smaller than those observed in late 2025 and early 2026.
The average piped natural gas tariff, associated with the reduction of “cold-climate zone” subsidies, as well as the October impact of the gasoline price rises observed in late September will also be contributing to such increase.
The stance of fiscal and monetary policy, together with reduced inertia in prices and wages, should lead to a decline in inflation over the remainder of the year.
Market expectations support this diagnosis. According to the latest REM, analysts project that inflation will remain below 2% per month in the coming months and will end 2026 at 30% year-on-year.
For 2027 and 2028, the market expects an inflation rate of 21.2% and 15.0%, respectively. Market instruments—which allow calculating a break-even inflation level—are even pointing to a further decline in inflation over the coming months.
Inflation expectations for the next twelve months remain anchored.
IV. Monetary policy
The objective of monetary policy is the convergence of inflation in Argentina to the level of international inflation.
During the third quarter, the BCRA maintained its prudent monetary policy stance through control of the amount of money.
Monetary discipline, together with the consistency of fiscal policy, contributed to keeping expectations anchored regarding the continuation of the disinflation process. This confidence was reflected in a further decline in inflation expectations according to the REM.
From the beginning of the year through October 28, the BCRA purchased more than USD15.8 billion in the foreign exchange market, comfortably exceeding the USD10 billion included in the IMF program as a target for the full year.
During the third quarter, purchases totaled USD3.4 billion, against a backdrop of lower inflows associated with private sector financing and stronger demand for portfolio dollarization. Beginning in October, the pace of purchases picked up again, with daily purchases returning to the same level as the average for the year. International reserves increased by USD1.222 billion during the quarter and have risen by approximately USD9 billion since the beginning of the year. This took place without creating pressure on the nominal exchange rate, which remained stable.
Foreign currency deposits held by the private sector continued expanding, reaching a stock of USD41.9 billion at the end of the quarter, a new all-time high. Savers continue showing confidence in keeping their holdings within the domestic financial system. That saving feeds financial intermediation: bank credit in dollars, and financing through the capital market continue expanding.
To deepen that intermediation, the BCRA broadened the range of permitted uses of foreign currency deposits, subject to stringent prudential requirements.
Liquidity management was the other pillar of monetary policy. Liquidity flowed among financial institutions without generating disruptive movements in short-term interest rates, with markedly reduced volatility. This dynamic is becoming increasingly entrenched in a growing and deepening money market.
The disinflation process was reflected in monetary dynamics. The monetary base resumed a path of growth in real terms, driven by demand: in real and seasonally-adjusted terms, it recorded average monthly growth of 1.3% in the third quarter, following nearly 14 uninterrupted months of contraction. In terms of GDP, it stood at 4.0%.
Transactional private M2 also continued growing, although slightly below the estimates in the central scenario of the previous IPOM, mainly owing to developments in non-interest-bearing sight accounts.
This recovery in money demand is the natural counterpart of the ongoing disinflation process.
Bimonetary credit to the private sector posted a monthly average expansion of 1.6% in the third quarter in real and seasonally adjusted terms, and is equivalent to 12.5% of GDP. Foreign currency loans continued posting sustained growth, while peso-denominated loans remained stable in real terms.
Going forward, growth in bimonetary credit is expected to become more widespread.
The launch of the Time Deposit Auction Program Aimed at Mortgage Loans under the Sustainability Guarantee Fund (FGS) is providing an additional boost to credit. Two auctions have already been held, with the maximum amount of ARS200 billion awarded in each, and mortgage lending increased by 21% in August and by a further 17% in September.
Finally, I would like to underscore again what I emphasized in the previous IPOM regarding the approval of the BCRA Charter reform. The reform would help to institutionally consolidate the disinflation process. By prohibiting financing of the public sector and limiting the distribution of earnings, the reform would reduce the risk of future fiscal imbalances once again leading to monetary expansion.
This would strengthen the credibility of the monetary regime, help anchor expectations, and contribute to greater predictability.
A cleaned-up BCRA balance sheet supports its liabilities with solidity and credibility. The BCRA’s main liability is our currency, the peso. The more the peso is worth, the lower inflation will be.