In this sense, he mentioned that the inflationary issue continues to be a priority. “Uruguay faces a inflation that is going to end up at 9% this year and that has a high component of transfer to prices of raw materials to the basic basket”, pointed out the economist. He then argued that “the Central Bank of Uruguay (BCU) it is doing a good job, by raising the rate and we could be quite close to a pause in that rise that has been registered”.
Policies to curb rising inflation
In the first week of October, after the meeting of the Monetary Policy Committee (Copom), the BCU raised its rate by 50 basis points to 10.75%. In August, it had increased its rate by another 50 basis points to 10.25%.
“We believe that inflation would have to go to a zone of 7% by 2023, although in general terms and in terms of activity it will depend on what happens both in Argentina What Brazil”, pointed out the Santander economist.
When consulted by the press about the impact of the rate hike, he pointed out that “monetary policy usually has a lag.” “When one is near the end of the bullish cycle, this does not imply that those rises have finished taking effect. I think we are in an interregnum in which monetary policy did part of the work, but the effect on inflation rates is not fully seen.
He also argued that based on the decisions being made by the United States Federal Reserve (FED) “central banks are likely to have to recalibrate” and that it is conceivable that “banks in the region will have to look rather than act in the coming months”.
With respect to deficitSantander projects that it will be 3% of GDP, although going to 2.5%. “The challenge comes from the revenue side rather than from the expense side to work on closing the budget gap“, held.
Source: Ambito
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