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Uruguay maintains interest rate at 11.50%

The Central Bank of Uruguay (BCU) announced yesterday, Wednesday, that it maintained the “contractionary bias” of the monetary policy and ratified the Monetary Policy Rate (MPR) at 11.50 percent, in line with what was announced last December.

The Monetary Policy Committee (Copom) highlighted in a statement the “decline in inflation since the September 2022 peak” with a January record of 8.05 percent, while “inflation expectations have begun a process of convergence”.

The decision takes place in a world scenario that “shows a more auspicious outlook than a few months ago” due to a “greater dynamism of the US economy and a better than expected annual closing for the Eurozone” at the same time that China “favorably boosts growth and global expectations”.

Central Bank of Uruguay. (Photo internet reproduction)
Central Bank of Uruguay. (Photo internet reproduction)

According to the entity, in Uruguay, “it is observed that the drought has begun to have an impact on agricultural activity and food prices”.

However, “it is estimated that the effect on the general price level would be transitory”.

It pointed out that the maintenance of the TPM is based on “the inflation projections of the Central Bank’s services, the behavior of agents’ inflation expectations” and that “the monetary policy transmission channels continue to function adequately”.

“The committee favorably assesses the recent evolution of inflation expectations and will take into account their future convergence as a guide for policy decisions, with the objective that they converge to the target range by the end of the monetary policy horizon,” it concluded.

The government of President Luis Lacalle Pou expects Gross Domestic Product (GDP) growth of around 5 percent in 2022 after recording a 4.4 percent expansion in 2021.

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