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Uruguay Monetary Policy February 2024

Uruguay: Central Bank stands pat in February

On 22 February, the Monetary Policy Committee of the Central Bank of Uruguay (BCU) kept the policy rate unchanged at 9.00%. The hold followed a cumulative 250 basis points cut since April 2023.

The decision was aimed at consolidating the ongoing disinflationary trend: Inflation remained within the 3.0–6.0% target range for the eighth straight month in January. Additionally, core inflation came in below the midpoint of the target range in January at 4.3%. That said, two-year-ahead market inflation expectations, at 6.0%, are still at the top of the target range and the BCU’s own inflation outlook for the coming 24 months. As such, the Bank decided to pause the easing cycle.

In its communiqué, the BCU did not include explicit forward guidance; however, it stated that the policy stance would remain focused on guiding inflation towards 4.5%—the middle of the target range. Our panelists expect the BCU to cut interest rates further this year, although our panelists expect inflation at the end of 2025—the end of the Central Bank’s forecast horizon—to come in at 5.9%, higher than the BCU’s forecast of 5.3%.

The next meeting is set for 10 April.

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