Uruguay Monetary Policy April 2017


Uruguay: Central Bank lowers M1+ target growth range in April

April 9, 2018

At its Monetary Policy Committee meeting on 6 April, the Central Bank of Uruguay announced its intention to attempt to anchor inflation within the target range of 3.0%–7.0% for the next 24 months. In turn, the Bank decided to lower the target growth rate of money supply (M1+), its main policy tool, to a target range of between 11%–13% in Q2, from a previous target range of 14.0%–16.0%.

Inflation surged above the Bank’s target range in February for the first time in the past 12 months, followed by a moderation and return to within the range in March. While a moderation in the prices of non-tradable and tradable goods has helped inflation largely remain within the target range in recent months, by offsetting substantial price changes of more volatile components of the consumer basket, particularly food, overall inflationary pressures have persisted.

Therefore, amid healthy economic activity and robust external sector growth, which helped generate a current account surplus, the Bank made it clear that it intends to maintain a more contractionary monetary policy stance, partly to keep inflation expectations under control in the current economic environment.

The Bank’s communiqué struck a similar tone to the one from the previous meeting; the Bank echoed its commitment to monitoring the global and domestic economy and to keeping inflation and inflation expectations as close as possible to the center of the target range in the next 24 months.

Panelists participating in the LatinFocus Consensus Forecast expect M1+ to grow 10.0% in 2018. For 2019, the panel sees the monetary aggregate expanding 8.9%.

Author:, Research Team Manager

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Uruguay Monetary Policy Chart

Uruguay Money Supply February 2018

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

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