The decision of Central Bank of Uruguay (BCU) to pause the bearish cycle of the interest rate can be interpreted as “a clear signal” that the objective is to maintain the inflation within the target range, economists agreed.
Diego Rodriguezmanaging partner of Gastón Bengochea & Cia., He specified in response to the query of Ambit that “it is a correct decision”, evaluating it as “a clear commitment and a clear signal in this process of maintaining the inflation controlled.”
Rodriguez echoed the fulfillment of the fiscal goal for the fourth consecutive year and highlighted that “it is a very good macro figure for the country and for the maintenance of its credit rating”, but at the level of Reference rate indicated that the BCU seeks to send “a clear message to the market that the control and objective of the inflation within the target range is essential.”
In this analysis, the economist considered that it is “a correct decision in an electoral year,” specifying that the proximity of the elections 2024 It can generate “some temptation to increase spending,” as happens in every election process.
Monetary policy in a neutral zone
In turn, in dialogue with this medium, the supervising economist in CPA Ferrere, Giuliano Cantisani, appreciated that the decision of the Copom to maintain the Monetary Policy Rate (TPM) at 9% “is in line with what we expected.”
“With this measure, the monetary politics “It would remain in a neutral zone, so it would not exert additional downward pressure on inflation,” he interpreted. Cantisani and evaluated it as “correct” by assessing the context in which “the inflation expectations for the next 24 months (monetary policy horizon) they continue to decline, but still outside the target range.”
Looking ahead, the economist anticipated that “in the absence of a significant reduction in inflation expectations, we do not expect additional cuts in inflation.” rates in the short term”, while, with respect to inflation, he projected “that it will remain within the target range during the first semester and then oscillate around the 6% ceiling.”
Can the BCU’s decision impact the value of the dollar?
On the other hand, in relation to dollar, Cantisani considered that Copom’s decision “was not a surprise for the market,” which is why he warned: “We do not expect major impacts on the market.” exchange rate, which would maintain relative stability, accumulating a slight depreciation during the year.”
In this regard, Rodríguez observed that “in the trajectory of the dollar other factors intervene, some of which may be more temporary”, but he insisted that “at this time when the economy has good projections of growth For 2024, maintaining the rate is a wise decision.”
Source: Ambito
