FX.co ★ Uruguay Central Bank Hikes Policy Rate

Uruguay’s central bank has raised its monetary policy rate by 25 basis points to 6.0%, with the aim of keeping inflation expectations anchored and guiding inflation toward its 4.5% target over the two-year monetary policy horizon. The bank noted that ongoing international geopolitical tensions continue to drive up energy prices and, indirectly, the prices of other tradable goods, leading to upward revisions in inflation expectations. In this context, policy rates at major central banks, as well as yields in international financial markets, have also moved higher. Domestically, the Uruguayan economy is showing signs of resilience after sector-specific and weather-related shocks temporarily dampened activity. The bank stated that inflation remains on a convergent path toward the target as these temporary effects dissipate, but cautioned that persistent geopolitical and climate-related shocks continue to pose significant risks to prices and inflation expectations.