He Central Bank of Uruguay (BCU) anticipated an additional increase before the end of the year in the interest rate of the Federal Reserve (Fed) of the United States, as he highlighted in his Monetary Policy Report (IPoM), in which he highlighted that the monetary policy of the most important central banks would remain contractionary due to “inflationary pressures.”
In moments where the BCU maintains its contractive phase although with a significant reduction in Monetary Policy Rate (TPM), whose cycle would be coming to an end anyway, the IPoM He anticipated that “the probability of an additional increase in the rate by the US organization grew.
The authorities of the central bank They considered that “the statements of the president of the Fed (Jerome Powell)” and other officials of the organization suggest an additional increase “before the end of the year”, after the increase in July and the decision to maintain the level of rates in September .
Days ago, the governor of the Fed, Christopher Waller, He noted that the entity is in a position to observe and see what happens, since the restrictive conditions of the financial markets are prepared to “do part of the work for us,” in reference to inflation control.
How can a Fed rate hike affect Uruguay?
The eventual increase in rates of the Fed could contribute to strengthening the dollar at a global level, which in Uruguay fails to exceed 40 pesos, although after two positive months it seems to have settled in the range of 39 pesos and partially correcting the exchange delay.
On the other hand, the monetary policy of BCU managed to appear independent of the behavior of the most important central banks and, beyond the contractionary bias, began a cycle of lowering rates this year, which began the year at 11.50% and, after four reductions on five occasions, cut 200 points basics until reaching the current 9.50%.
Regarding this behavior, the president of the Central Bank, Diego Labat, He highlighted that “monetary policy has been much discussed, but it is increasingly understood” and anticipated the possibility that the MPR will be maintained because “the expectations of inflation They are not yet in the target range.”