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Uruguay Monetary Policy May 2024

Uruguay: Central Bank stands pat in May

At its meeting on 16 May, the Monetary Policy Committee of the Central Bank of Uruguay (BCU) kept the policy rate unchanged at 8.50%, following April’s 50 basis points cut.

The Central Bank’s decision was primarily influenced by the goal of keeping inflation around the center of the 3.0–6.0% target range. Inflation was reported at 3.7% in April, marking 11 consecutive months within the target range. Additionally, average inflation expectations stood at 6.25%, showing a slow downward trajectory despite some rigidity. Meanwhile, economic activity showed signs of expansion, driven by domestic consumption and exports, as the negative effects of the drought faded.

In its communiqué, the BCU did not provide explicit forward guidance on the future direction of interest rates, stating that future decisions will depend on the evolution of both local and international conditions and the convergence of inflation expectations towards the center of the target range. Our panelists expect the BCU to cut interest rates further this year.

The next meeting is set for 16 July.

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