Headline inflation has evolved in line with forecasts and has continued to fall, along with inflation expectations which remain aligned with the 3% target for the next two years. However, the core inflation (which excludes volatile items) has exceeded expectations, influenced by stronger domestic spending and high cost pressures. Compared to the projections in the June Monetary Policy Report (IPoM), both consumption and investment have performed better in recent months, while the impact of the temporary factors that boosted activity early this year has dissipated, as was indicated at the time. Externally, the market outlook for the Federal Reserve’s (Fed) monetary policy has become more expansionary, which has favored the evolution of short-term financial conditions. In any case, the risks of an abrupt deterioration in these conditions persist. In the central scenario, projections for domestic demand growth are increasing, especially for this year. Upward adjustments are also being made to GDP, although by a lower magnitude. Regarding inflation, the core component is estimated to reach higher levels than those projected in June between the end of this year and the first part of the next year. Headline inflation is expected to converge to 3% during the third quarter of 2026. The Board will evaluate the next movements of the Monetary Policy Rate (MPR) being attentive to the evolution of the macroeconomic scenario and its implications for inflation convergence. In the current conditions, the risk of greater inflation persistence calls for gathering more information before continuing the process of leading the MPR to converge to its neutral range.