Uruguay’s Central Bank increased the benchmark interest rate from 8.5% to 8.75% to align with a 4.5% inflation target. Despite stable year-on-year inflation at 5.03%, core inflation is rising. GDP is projected to grow by 3.1% in 2024, influenced by global economic conditions and domestic inflation expectations.
The Central Bank of Uruguay (BCU) has announced an increase in the benchmark interest rate from 8.5% to 8.75%, aiming to align inflation expectations with a target of 4.5% per annum over the past two years. This change marks the first adjustment to the policy rate since April when it was reduced from 9%. The current inflation rate as of November stands at 5.03%, indicating stability, although core inflation has risen for two consecutive months. Economic projections indicate moderate growth in Uruguay’s GDP and inflation expectations for 2024 remain relatively stable.
This decision by the BCU comes amidst ongoing inflationary pressures and a slight increase in domestic inflation expectations. The monetary policy aims to stabilize the economy and keep inflation within target ranges, which are critical for maintaining economic confidence. Additionally, the impact of global economic trends and the actions of the U.S. Federal Reserve are influencing local economic conditions and policy adjustments in Uruguay. Understanding these dynamics is crucial for evaluating future economic conditions in the region.
In summary, the BCU’s rise in the interest rate reflects a proactive approach in maintaining inflation within targeted levels while supporting sustainable economic growth. With GDP growth forecasted at approximately 3.1% for 2024, and given the current inflation trajectory, the central bank remains focused on adjusting its policies according to evolving economic indicators. Continued vigilance will be required as both domestic and international economic conditions change.
Original Source: en.mercopress.com
