Diego Labat opened the door to a new cut in interest rates

Diego Labat opened the door to a new cut in interest rates
August 31, 2023 – 19:21

The president of the BCU considered that “there is room” for another drop, although he tied it to what happens with inflation.

He President of the Central Bank of Uruguay (BCU), Diego Labat, considered that “there is room” for a new cut in the interest rates as long as the levels of reference are kept within the target range. inflation.

labat considered that the rates were used “as an instrument of monetary politics” and specified that when the inflation exceeds the ceiling of the range, of 6%, the rate increases. On the other hand, “when it is below, the rate falls”, so it could fall again at the next meeting of the Monetary Policy Committee (Copom).

The president of the BCU This was expressed during a lunch organized by the Association of Marketing Managers (ADM), in which the Secretary of the Presidency, Alvaro Delgado; the prosecretary, Rodrigo Ferres; the Minister of Economy and Finance, Azucena Arbeleche; and the director of the Office of Planning and Budget, Isaac Alfie.

On the sustained cut of the Monetary Policy Rate (TPM), at a press conference, labat He specified: “When it corresponded, we went up. Now inflation falls and allows us to go down little by little”. Looking to the future, he pointed out that “there is room to continue falling”, although he linked this situation to “inflation holding up and inflation expectations continuing to fall”.

Statements by the President of the Central Bank of Uruguay (BCU), Diego Labat

Inflation “is where we expected it to be”

On the other hand, the hierarch stuck out his chest for the behavior of the inflation, which stood at 4.79% in July. “It is where we expected it to be,” he assessed and maintained that two months ago it was within the target range of between 3 and 6% established by the government.

Besides, labat He highlighted that “almost all the items of the Consumer Price Index (CPI) are below their historical average” and, looking to the future, he was enthusiastic that “from now until the end of the year we expect it to continue within the range” .

In turn, the owner of the BCU He said that “things are beginning to be seen such as the recovery of purchasing power” and compared: “When there is high inflation, the income of companies and workers ends up being eroded and that begins to make one fight with another. Low inflation reflects a society with better relationships”.

Source: Ambito

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