The BCU will keep the interest rate frozen, analysts predict

The BCU will keep the interest rate frozen, analysts predict

He Central Bank of Uruguay (BCU) will keep the reference interest rate intact at 9% during April, market agents estimate.

According to Economic Expectations Survey released this Tuesday by the BCU, the financial entities and economists consulted predict that the Monetary Policy Committee (Copom) maintain the pause in the bearish rate cycle when it meets on Wednesday the 10th.

In this way, the general consideration in the Uruguayan market is that the BCU will not announce modifications, as happened in February, with the aim of prioritizing the control of the inflation within the target range of 3-6%.

In fact, the Inflation Expectation Survey which was also released this day showed an improvement in the median that the market expects in that indicator for the calendar year, standing at 5.98% when two months ago that projection was 6.30%.

Maintaining the BCU’s monetary policy rate would also be framed in a similar international context, where central banks are reluctant to soften the restrictive cycle.

The United States Federal Reserve (Fed), a world-renowned institution, has disappointed investors by not starting to lower reference rates in March, as expected, and has even suggested that the cuts will be smaller than expected for this year.

The agents consulted by the BCUHowever, they do estimate that there will be a new reduction in the interest rate in Uruguay since the median TPM for the month of August is 8.75%.

It should be noted that, before that date, there will be two new meetings in which the Central Bank will define its rate policy: one in May and another in July, so the forecasts are of some stability since it suggests a reduction of 25 points basics throughout two meetings.

The monetary policy of the BCU has returned, in recent weeks, to the center of criticism as one of the causes of the exchange delay. Economists and productive sectors have once again questioned whether it is tied to the control of inflation when the dollar registers a depreciation of 16%, affecting the competitiveness of agriculture and the manufacturing industry.

Source: Ambito

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