Uruguay: Central Bank raises its monetary policy rate again in November
At its 11 November meeting, the Monetary Policy Committee of the Central Bank of Uruguay decided to raise the monetary policy rate by 50 basis points to 5.75%. The decision marked the third consecutive rate hike since August, after the committee adopted a monetary policy rate and abandoned seven years of targeting money supply to control inflation back in September 2020.
The Central Bank opted to hike the monetary policy rate to tame inflationary pressures, as inflation in June–October averaged above the upper bound of its 3.0%–6.0% target range. The Bank determined the domestic economic recovery showed further signs of improving economic activity due to strong progress on the vaccine rollout and relatively muted new Covid-19 cases in recent months.
Looking ahead, the Bank kept its hawkish stance, explaining “as long as there are no setbacks in health matters, the priority of monetary policy will focus on driving inflation expectations to the center of the target range of 3% to 6% in the monetary policy horizon.” As such, the majority of our panelists see an additional rate hikes in the monetary policy rate before year-end.
The next monetary policy meeting is scheduled for 30 December.