The BCU’s inflation projection increased to 7.27%, while the growth projection fell to 1.5%.
He Central Bank of Uruguay (BCU) released today its monthly surveys of expectations, in which a slight increase in the inflation expectations both for this year and for the next. By 2023, the median of responses on estimated inflation went from 7.20 to 7.27%. For 2024 rose from 6.88 to 6.95%.
Are moderate increasesalthough they reflect that analysts project that inflation will not enter the target range of the Central Bank (3 to 6%) neither this year nor next.
The Central Bank has developed a contractive monetary policy raising the interest rate, which has brought inflation down – to a large extent through the exchange channel – placing it at 7.3% in the moving year to March. And many analysts anticipate that inflation may continue to decline in the coming months.
However, they estimate that there may be a certain upward trend towards the end of the year, once the base of comparison changes and the CPI peak values of mid-2022 are left behind.
Even so, and despite this slight increase in inflation expectations, the BCU’s Monetary Policy Committee decided to lower the inflation rate by a quarter of a percentage point. Monetary Policy Rate (TPM) taking it to 11.25%. According to the statement from the monetary authority, inflation has consolidated its downward trend. In any event, the decline is modest and the contractive bias of monetary policy remains.
The growth projection fell to 1.5%
In turn, the analysts consulted by the Central Bank corrected downwards again the growth projection of the economy going from 1.8 to 1.5% according to the median of the responses to the survey. The drop was expected and is incorporating the impact of the drought, as well as a more complex regional and global context for the Uruguayan economy. In fact, several of the main consultancies in the country already estimate growth of 1% for this year, although certain improvements in the level of activity are expected in the second half of the year.
Regarding the projection of the exchange rate at the end of the year, there was a new decrease in the estimate, with the median of analysts projecting that the dollar will be at 41.5 pesos in December, half a peso below the estimate for the month past.
Source: Ambito
