FX.co ★ Uruguay Reduces Key Rate by 25bps to 8.75%

In August 2025, the Central Bank of Uruguay decided to reduce its policy rate by 25 basis points, bringing it down to 8.75%. This move retains a contractionary approach to aid the steady alignment of inflation with the 4.5% target. As of July, inflation was measured at 4.53%, aligning with the objective after experiencing four successive monthly declines. Meanwhile, core inflation saw a slight dip from 5.7% to 5.5%, although the non-tradable component showed a more gradual moderation. Projections from the BCU anticipate that inflation will hover around 4.5% throughout the policy horizon. On a global scale, trade tensions continue to pose risks to inflation, albeit with a marginal uptick in international growth forecasts compared to the previous Copom meeting. The Board highlighted the importance of consolidating inflation around the target and the reduction in average expectations. They indicated a willingness to persist with rate cuts towards neutrality, provided that domestic conditions, inflation trends, and expectations—especially from the business sector—progress as anticipated.