He Central Bank of Uruguay (BCU) detailed its forecasts for the progress of the World economy, with the focus mainly on the deceleration of activity in China and the decision on the rates of the Federal Reserve (Fed) of the United States.
In that context, the BCU anticipated a panorama with “favorable financial conditions” for the economies of the region, when publishing the minutes of the Monetary Policy Committee (Copom), that met last Thursday and defined a pause in the bearish cycle of the Reference rate.
Regarding what has happened in recent weeks, the BCU indicated that in the global economic environment the activity decelerates “at a slower rate than expected”, echoing that the data for the fourth quarter of 2023 surprised upwards in developed countries, with the exception of the Euro zone.
Particularly about China, one of the main trading partners of Uruguay, In the minutes it was clarified that “the slowdown in activity will be pronounced”, beyond the latest positive data.
Inflation and rates
From the Central Bank they indicated that the inflation global “stopped the reduction that it showed in recent months” and they considered that the core “suffers upward pressures” due to the dynamics of the wages, derived from work robustness.
Faced with this slow decline in prices, they considered that the central banks of the world’s main economies will prolong the expansionary cycle of the economy. monetary politics “given the difficulties in reducing the most persistent component of inflation.”
The Fed’s decision and the global dollar
On the other hand, the BCU explained the decision of the Fed to maintain the Reference rate and considered it “probable” that the expected cut will not materialize “at least until the beginning of May.”
In fact, they pointed out that in the decision of the Federal Reserve data such as the indicators of the working market and the slowdown in the decline of the inflation, something that analysts have been observing and waiting for the key data on the cost of living that will be known this Thursday on US soil.
This situation was what drove the decline of dollar globally in previous weeks, indicated the monetary authority.
Forecasts for Argentina and Brazil
On the other hand, the Central Bank projected “favorable financial conditions” for the region’s economies in this scenario. In this regard, he referred to the situation that Argentina and, beyond the change of course in the neighboring country with the government of Javier Milei, to which they recognized that it makes “macroeconomic corrections,” they anticipated that there is a context of “high uncertainty.”
Instead, they highlighted the reality of Brazil, main economic partner of the country. “Activity showed a smaller slowdown than anticipated,” he reflected on what happened in the neighboring nation.
Source: Ambito
