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Uruguay Monetary Policy October 2023

Uruguay: Central Bank cuts policy rate in October

On 5 October, the Monetary Policy Committee of the Central Bank of Uruguay (BCU) reduced its policy rate by 50 basis points to 9.50%, following a 75 basis point cut at the prior meeting in August. As a result, rates have now been cut by 200 basis points since April.

The decision was justified by the fact that inflation hit an 18-year low and remained within the 3.0–6.0% target range for the fourth straight month in September. Moreover, in September, core inflation was near the bottom of the target range. In addition, the Bank commented that two-year market inflation expectations had fallen recently.

In its communiqué, the Bank stated that the policy rate was “close to the bottom of the easing cycle”. Our panelists currently expect around 200 basis points of further rate cuts by end-2024, though forecasts for the policy rate could be revised up ahead in light of the Bank’s somewhat hawkish forward guidance.

The next Monetary Policy Committee meeting is scheduled for 16 November.

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