Uruguay’s Central Bank Sets Sights on 4.5% Inflation Goal

Guillermo Tolosa, Uruguay’s new central bank president, announced on March 24, 2025, a push to lower inflation to 4.5%. Speaking at his inauguration, the 49-year-old economist outlined a plan to build on recent gains.

Uruguay’s inflation hit 5.49% in 2024, its lowest since 2005, but Tolosa called it “still high.” Uruguay tamed decades of price surges, averaging 8.4% annually before 2022, with a slowdown starting in 2023.

The central bank’s 3-6% target range held for two years, yet market forecasts for 2025 sit at 5.80%. Tolosa aims to close this gap, using interest rates and a flexible peso exchange rate.

Tolosa took charge as Yamandú Orsi, a 57-year-old history professor, began his presidency on March 1, 2025. Orsi leads the leftist Frente Amplio, back in power after five years.

Tolosa stressed the bank’s independence, backed by Economy Minister Gabriel Oddone, who shares the 4.5% goal. Inflation rose to 5.10% in February 2025, driven by housing and utility costs, while manufacturing shrank 1.8% in mid-2024.

Uruguay’s Economic Balance

A strong peso curbs import prices but squeezes exporters, sparking rural sector complaints. High interest rates also slow industry and jobs, creating a tricky balance. Tolosa called the 4.5% target the “last mile” to match global norms, like the 2% common in advanced economies.

Success could boost Uruguay’s appeal to investors, easing household burdens from rising essentials. Yet, global risks, including possible U.S. tariffs under Donald Trump, threaten progress.

Uruguay’s central bank maintained rates in August 2024 as inflation hit 5.4%, the highest since June 2023. Tolosa’s team now faces aligning expectations with reality in a small, trade-reliant nation. His five-year term under Orsi will test this resolve.

The story behind the numbers reveals a nation at a crossroads, seeking stability amid growth pains. Businesses watch closely as Tolosa navigates these tensions. A steady 4.5% rate could signal maturity, but the path remains narrow and uncertain.