Uruguay Monetary Policy October 2017


Uruguay: Central Bank again raises M1+ target growth range to support the domestic economy

October 6, 2017

Uruguay’s Central Bank decided to increase the target growth rate of money supply, its main policy tool, at its 6 October Monetary Policy Committee meeting. The M1+ growth rate was increased from a target range of 11.0%–13.0% in Q3 to a target range of 13.0%–15.0% in Q4, in a bid to sustain domestic demand and to anchor inflation expectations within the target range of 3.0%–7.0%. k

Throughout the third quarter of the year, inflation maintained an upward trend but nevertheless remained comfortably within the Central Bank’s target range. This was partly due to weaker inflation dynamics for non-tradable goods, which helped anchor inflation expectations. Robust economic activity leading to a favorable macroeconomic environment together with the inflation result gave the Bank room to meet the growing demand for money in the Uruguayan economy. The decision was taken in order to consolidate inflation near the center of the target range and to mitigate the dangers of international uncertainty to the domestic economy.

The tone of the statement was unchanged from the prior one, as the Bank restated its commitment to monitoring the global and domestic economy and keeping inflation where it is over a 24-month horizon. The next Monetary Policy Committee meeting is scheduled to take place at the end of December.

Panelists participating in the LatinFocus Consensus Forecast expect M1+ to grow 12.8% in 2017. For 2018, the panel sees the monetary aggregate expanding 9.3%.

Author:, Economist

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Uruguay Monetary Policy Chart

Uruguay Money Supply August 2017 0

Note: Year-on-year changes and 3-month average variation of M1+ in %
Source: Uruguay Central Bank (CB).

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