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Uruguay Monetary Policy October 2024

Uruguay: Central Bank of Uruguay leaves rates unchanged in October

Policy rate remains at 8.50%: At its meeting on 8 October, the Central Bank of Uruguay (BCU) decided to leave the policy interest rate unchanged at 8.50% for the fourth consecutive meeting. The decision was in line with market expectations.

Monetary policy drivers: The BCU aimed to consolidate the downward trend of inflation and inflation expectations toward the mid-point of the Central Bank’s 3.0–6.0% target band. Price pressures remained within target in September—where they have been for over a year—easing to 5.3% on lower food costs. The Central Bank also noted that inflation expectations fell further in the month, entering the target range. Moreover, the BCU mentioned that economic growth remained strong in Q2 and that it expects this strength to persist in the coming quarters, giving the Bank room to maintain a tight monetary policy stance. The decision also likely aimed to support investor sentiment amid mounting uncertainty in the run-up to elections on 27 October.

Easing cycle to start in 2025: The communiqué was void of explicit forward guidance. Most of our panelists expect the Central Bank to hold for the remainder of this quarter and to resume its easing cycle in 2025; our Consensus is for 50 basis points of cuts by end-2025.

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