Uruguay Cuts Key Rate by 50bps to 8.25%
In October 2025, the Central Bank of Uruguay adjusted its policy rate downward by 50 basis points, bringing it to 8.25%. This marks a shift from a strictly contractionary approach to gradually adopting a more neutral policy stance. As of September, inflation was recorded at 4.25%, maintaining proximity to the central bank's long-term goal of 4.5% for the fourth month running. Core inflation decreased to 5.0% as various economic elements slowed over the recent quarter. According to the BCU's latest forecasts, while inflation might be slightly below earlier projections, it is expected to align with the 4.5% target over the designated policy period. This comes despite a slight downward adjustment in economic activity projections, attributed to regional factors. The Board highlighted the importance of steadying inflation around their target and the ongoing improvement in inflation expectations. They indicated a willingness to continue their cycle of rate reductions, aiming for policy neutrality, provided that domestic conditions, inflationary trends, and particularly business expectations, develop as anticipated.
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