FX.co ★ Uruguay Central Bank Hikes Rate to 9.25%

The Central Bank of Uruguay increased its benchmark policy rate by 25 basis points, reaching 9.25% during its April 2025 meeting. This move underscores their commitment to achieving inflation convergence toward the 4.5% target within a 24-month Monetary Policy Horizon. As of March, annual inflation stood at 5.67%, maintaining its presence within the target range for an unprecedented 22 consecutive months—the longest duration since the adoption of the inflation-targeting framework. Nevertheless, core inflation exceeded headline inflation and fell outside the target range, largely influenced by rising prices of tradable goods. On a global scale, advanced economies are grappling with diminished growth prospects and continued upward pressure on core inflation. Uruguay's GDP witnessed a 4.1% year-on-year expansion in the third quarter, with growth forecasts for 2024 anticipated at 3.4%. The Central Bank emphasized the positive effects of monetary policy transmission but acknowledged persistent global uncertainties, underscoring the necessity for a more stringent policy to stabilize inflation expectations.