The Central Bank of Uruguay (BCU) has strategically cut the Monetary Policy Rate (MPR) by 50 basis points, bringing it down to 8.5%.
This move comes as inflation in Uruguay shows signs of easing, with the rate dropping to an annualized 3.8% as of March.
This decision reflects the country’s success in maintaining inflation within the target range of 3-6%, alongside a notable dip in market expectations.
Remarkably, inflation is at its lowest since August 2005, with the BCU’s tracked expectations indicating a further decline in March, hitting historical lows with a three-month average of 6.3%.
On a global scale, economic activity is slowing at a pace slower than expected, with a gradual reduction in worldwide inflation.
This context underscores Uruguay’s cautious optimism, as its GDP managed a modest growth of 0.4% in 2023.
Looking ahead, short-term forecasts are positive, suggesting continued economic expansion in the forthcoming quarters.
In response to these developments, the BCU’s board opted to reduce the MPR to 8.5%.
This adjustment aligns with the bank’s ongoing efforts to center inflation within the preferred range and to synchronize market expectations with the monetary policy outlook.
Previously, in February, the Copom had maintained the MPR at 9%, following a 25 basis point cut in December.
This latest adjustment marks a further step in Uruguay’s prudent monetary policy, aiming to foster stable economic growth amidst fluctuating global conditions.