After seven months without changes, the Central Bank raised the interest rate to 6%: the details

He Central Bank of Uruguay (BCU) decided to raise the reference interest ratethat is, “the price of money”, of the current 5,75% a 6%. The decision to raise the Monetary Policy Rate (MPR) by 25 basis points was adopted unanimously by the BCU Board of Directors this Thursday, in line with what the market expected and after seven months without changes.

According to the entity, the decision was made with the objective of preserving the anchorage of the inflation expectations and contribute to the convergence of prices towards the goal of 4.5% in the two-year monetary policy horizon.

In the month of September, inflation stood at 4.7% year-on-year, driven by the increase in imported goods, fruits, vegetables and fuels. He Monetary Policy Committee (Copom) noted in the statement that it does not observe generalized inflationary pressures and that inflation of non-tradable goods and services has remained stable in recent months.

Furthermore, he highlighted that the inflation expectations For the next 24 months they remained anchored around the established objective. The analysts, consultants, banks and AFAP surveyed by the BCU They project a price increase of 4.55% in medianfinancial operators at 4.58% and companies at 5%. “The average of the surveys reaches 4.71%, which confirms confidence in the inflation targeting regime,” said the regulator.

According to Copom’s analysis, on the international stage, geopolitical tensions continue to drive energy prices and, indirectly, those of other tradable goods, which has contributed to an upward revision of inflation expectations. In this context, both the interest rates of the main central banks and those prevailing in international financial markets have been adjusting upwards.

At the domestic level, he considered that the economy “shows signs of resilience after facing sectoral and climatic shocks that also temporarily affected activity.”

In this sense, the BCU indicated that the inflation It will remain temporarily above the target, although within the tolerance range, while supply shocks are processed. The institution hopes that it will then converge towards the 4.5% objective.

The decision maintains, according to the BCU, an expansive instance of monetary policy. The agency noted that the measure seeks to limit the persistence of temporary increases in energy and food and prevent them from being passed on to the rest of the prices and expectations.