The monetary authority does not rule out establishing more ambitious objectives in the medium term if the results are consistent, but it will not modify the goals set at the beginning of the year.
He inflation target range in Uruguay It is the most recent topic of debate around the economy, whose aspects do not fail to take into account, in addition, the level of reference interest rates. In that sense, from the Central Bank (BCU) They still do not aim to reduce the current 4.5% goal despite a recent report suggesting that a more ambitious goal could be moved forward.
The ten months that inflation It is within the target range, along with the size of the Uruguayan economy and an analysis of three characteristics that the country has as an emerging economy. —rigidities asymmetric nominals, indexing to past inflation and price fixing in the dominant currencies—led economists to Luis Rodrigo Arnabal and Javier Garcia-Cicco will determine the optimal level of inflation in the long term at 3.5%.
This opened a new debate regarding whether Uruguay can have a target range more ambitious than the current one between 3% and 6%, with the objective at 4.5%, confirmed at the beginning of the year by the Macroeconomic Coordination Committee; and in the middle of an official speech regarding the intention to consolidate the increase in prices at a lower level.
In that sense, sources of BCU confirmed to Ambit that, for the moment, there will be no changes and that the goal remains at 4.5% (-1), although they did not rule out that, in the medium term, a more ambitious figure could be established.
In this regard, the current goal is the variable with which we work in the country’s economic and monetary policy, at least in what remains of the current government administration. In any case, the Central Bank confirmed that reducing the inflation target is possible and that, in fact, Uruguay You should advance on that path of improving your target range, but “time by time and step by step.”
The BCU projections
He BCU, For its part, it projects for this year a inflation cumulative growth of 4.8%, despite the fact that most countries expect a rebound in price pressures for the second half, including Uruguay.
This would be possible thanks to the commitment to maintain the inflation within the target range – where it has remained for the last ten consecutive months – and the assurance that, faced with the various possible scenarios, the monetary authority will take “the necessary actions to maintain that objective.”
It should be remembered that the last Consumer Price Index (CPI) spread by the National Institute of Statistics (INE) It was 3.8% year-on-year in March; while the accumulated in the year is 2.2%.
Source: Ambito
