FX.co ★ Uruguay Holds Rate at 9.25% to Reinforce Disinflation Path

In May 2025, the Central Bank of Uruguay decided to maintain its policy rate at 9.25%, the highest level seen since 2023. This move aims to facilitate the continued alignment of inflation towards the target of 4.5%. As of April, the inflation rate was recorded at 5.36%, which remains within the tolerance range of 3-6% for the 23rd consecutive month. Core inflation, however, is still hovering near the upper limit, reflecting ongoing price inflexibilities. Analysts have revised their two-year inflation forecasts downward from 5.8% to 5.5%, while market expectations have declined from 6.1% to 5.3%. The Central Bank of Uruguay's short-term projections suggest a slightly accelerated disinflation process compared to earlier forecasts, with the possibility of achieving the 4.5% target within the next year. Nevertheless, challenges such as sluggish local economic activity and global uncertainties pose risks to the outlook. Despite the reduced inflation forecasts, the central bank opted to sustain its contractionary monetary policy, citing persistently high core inflation and elevated inflation projections as justification for keeping the benchmark interest rate unchanged.