The market anticipates a drop of 25 basis points, amid the discomfort of several sectors due to the exchange rate delay.
The Monetary Policy Committee (Copom) of the Central Bank of Uruguay (BCU) is currently meeting to define a possible cut in the interest rate which, if market forecasts are validated, would be reduced by 25 basis points to reach 8.75%.
He BCU defined a pause in the bearish cycle of the Monetary Policy Rate (TPM) at the beginning of the year, after maintaining it at 9%, but, amid strong criticism for the exchange delay and the promise of a signal in that sense from President Luis Lacalle Pou suggests this new reduction.
In any case, this is unexpected news for economic agents. According to Business Expectations Survey (EEE) of the BCU March, it was expected that the MPR would be maintained during this month, with a future decrease in August, a very different panorama from the current one.
LRM cut rate indicates cut
The possible cut of the MPR was advanced in recent days by the cut rate of the Monetary Regulation Bills (LRM) of the BCU, which already on Friday was below the current 9% of the reference interest rates, when the securities tendered went from 9.02% in the previous auction to 8.95%.
The tender, however, was for one year, so it was expected that the trend would be ratified in Monday’s placements, something that, in fact, occurred, with a cut-off rate of 8.78% of the LRM maturing in 30 days. In the same line, the Yield Curve in Pesos (ITLUP) of Bevsa recorded a one-month interest rate of 8.76%.
The measure could also mean the end of the restrictive cycle in the monetary policy that remains in force, despite the recurrent reductions last year. The Economist Jose Licandro expressed on his INE, and the rate differential in pesos and Indexed Units— were at 6.5%, then the real MPR would be 2.2%.
Source: Ambito
