The president of the Central Bank of Uruguay highlighted the level of the CPI and defended the “slight contractionary bias” of monetary policy.
The president of Central Bank of Uruguay (BCU), Diego Labat, highlighted that “the inflation is where we want it to be”, when referring to the annual data of the CPI and defend the monetary politics contractive action carried out by the entity.
Labat also referred to the latest decision of the Monetary Policy Committee (Copom), to maintain the Reference rate at 9%, noting that “we understood that it was time for pause,” after a year in which the BCU led the cut in the MPR at the regional level.
When asked at a press conference about the level of the CPI, the head of the BCU stated: “We have a target of 4.5% and inflation is where we want it to be.” In turn, he highlighted that the monetary authority’s forecasts indicate that the inflation will continue in the target range in the two-year horizon. “We project that it will remain in the range for the entire period,” Labat explained.
Interest rate decisions
On the other hand, the president of the Central Bank admitted that the Monetary Policy Rate “it remains with a slight contractionary bias” and, when expressing why there was no new reduction, he added: “We are very satisfied, but we have to be careful and look at the pressures that exist, both in the international situation as in the situation of the country.”
In the future, he anticipated that Copom will make decisions “looking at the data and how it evolves so that the inflation and the expectations of economic agents are converging towards the center of the range.”
While, Labat clarified that, given the possibility of an escalation of the inflation In the second semester, the BCU will take action on the matter. “If it deviates from the target range, the bank takes action. We want agents to understand this: our commitment is to react whenever necessary if there are deviations from the goal.”
Exchange delay
Finally, after a question about the exchange delay which records the dollar in the country and which was the cause of complaints from the agro-export sector, the head of the BCU noted: “Uruguay “It has a free floating policy.”
“Floating is part of politics and we have no other objectives than the inflation”, He maintained, ruling out an intervention by the monetary authority to correct the value of the exchange rate. And he concluded: “If we have many objectives, we may not be able to meet any of them.”
Source: Ambito
