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Uruguay Monetary Policy August 2024

Uruguay: Central Bank of Uruguay leaves rates unchanged in August

Latest bank decision: At its meeting on 16 August, the Central Bank of Uruguay (BCU) decided to maintain the policy interest rate at 8.50% for the third consecutive meeting. The hold was in line with market expectations.

Monetary policy drivers: The BCU’s move aimed to keep inflation within its 3.0–6.0% target range and to align inflation expectations with the 4.5% monetary-policy-horizon target. Inflation in July equaled 5.6%, marking 14 consecutive months within target. Additionally, average inflation expectations for the next two years decreased again to 5.9% in July, falling within the target range for the first time in the Bank’s history.

Policy outlook: The BCU did not provide explicit forward guidance. Most of our panelists predict the rate will hold steady through the end of 2024, while the rest anticipate a 50 basis point cut. A quicker-than-expected decline in inflation expectations and a shrinking fiscal deficit pose downside risks. The next meeting is set for 8 October.

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