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Interest rates fall in the region and stagnate in the world, what will happen in Uruguay?

Interest rates fall in the region and stagnate in the world, what will happen in Uruguay?

The interest rates are going through a moment of cuts in the region, in line with the drop in inflation, while at the international level, developed countries tend to decide on a pause or even an increase, so we are waiting to see what the country will decide Central Bank of Uruguay (BCU).

That decision will be made next month at the next meeting of the Monetary Policy Committee (Copom), for which the market expects a new cut of 75 basis points in the Monetary Policy Rate (TPM), which would take it from 10% to 9.25%.

According to an Exante survey, rates remained paused in USA, at a level of between 5.25% and 5.50%, as in the United Kingdom, where they remained at 5.25%. Even in the Eurozone The authorities decided on an increase of 25 basis points, leaving them at 4%.

On the other hand, at the regional level, although the tone of monetary policy continues to be restrictive, a good part of the countries proceeded downwards. So it is that Chili accumulates a cut of 175 basis points in recent months, remaining in the order of 9.50%.

While, Brazil was around 12.75% with a cumulative reduction of 100 basis points, while Paraguay has a drop of 50 basis points and rates at 8% and Peru cut 25 basis points, remaining at 7.50%.

What happened during the last months in Uruguay?

In line with what is happening with other countries in the region, the BCU is also moving forward with a reduction in TPM which in the last two months was reduced by 150 basis points, after the last cut.

The reference rates They started the year at 11.50%, with a defined increase in December 2022, a line that was ratified in February. Then, in April, the central bank that conducts Diego Labat took its first step towards a reduction, with a drop of 25 basis points, setting it at 11.25%.

Thus, after maintaining that level in May, in July it was cut 75 points to remain at 10.75% and, with an equal reduction in August, it remained at the current level of 10%. In the future, his own Labat He admitted that a new reduction is expected, in line with the decline in inflation, which is at its lowest level in 18 years and is below the target range.

In fact, the market expects a new reduction of 75 basis points which, if confirmed, would leave the MPR at 9.25%.

Source: Ambito

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