He Monetary Policy Committee (Copom) of the Central Bank of Uruguay (BCU) This Thursday, it will have the first meeting of 2024 in which it will define the course of the monetary policy rate for the rest of the year, after leading the rate cuts during 2023.
On Thursday, the authorities of the BCU will define whether they continue with the bearish cycle, shielded by more than eight months of inflation contained within the target range or if, in tune with the international scenario, it pauses and extends a new decline for a few months in order to consolidate inflationary control.
The interest rate is currently at 9% after the cut at the end of last December, when the BCU The MPR fell by 0.25%.
Already in October, Copom had warned that the bearish cycle was coming to an end, so analysts do not rule out a pause until the second half of the year that would allow consolidation of the inflation around 4%.
However, the BCU has to its credit the reduction of the expectations of inflationwhich at 24 months were reduced in the last three months ended November, reaching historical lows, with an average of 6.50%, product of 6.10% of analysts’ expectations, 6.39% of financial markets and 7% of companies.
He BCU It closed 2023 in which it took a much less contractionary course than the previous ones and led the reduction of the Monetary Policy Rate in the region, with a cut of 250 basis points since April, when it was at 11.5%.
The central banks of Brazil and Chiliwhich have also been differentiated from the doubts of the United States Federal Reservewhere the fight against inflation It has not yet produced the expected results.
In fact, the start of the downward cycle of reference interest rates has been postponed and only a minimal proportion of the market expects the Fed to start it in March – as projected in December – or even in May, taking into account the statements of its president, Jerome Powell.
On Wednesday, eyes will be on the minutes of the Federal Reserve’s January meeting, which will be released that day, for more clues about the timeline for cuts. Depending on the tool Fed Watch From CME, the probability of a cut in June is 74%.
Another major central bank, the European one (ECB) has also made it clear that the path to easing restrictive monetary policy is still far away.
Source: Ambito
