Copom decided that the MPR remains at 8.5% to consolidate the permanence of inflation in the center of the target range.
He Central Bank of Uruguay (BCU) maintained the Reference rate at 8.5% at the end of the meeting of the Monetary Policy Committee (Copom), after the surprising drop that it had defined last month.
In this way, the Copom acted in line with what economic agents expect, according to the brand new survey published by the BCU on Monetary Policy Rate and inflation expectations to financial markets, which anticipates a single cut of 25 basis points throughout the year, which would occur in August.
When communicating the decision, the BCU authorities positively valued the permanence of the inflation around the center of the target range, which has already been in place for 11 months, as well as the gradual convergence of its expectations.
By maintaining the TPM, Copom aims to consolidate the CPI around 4.5% and align it with expectations. Interannual inflation is today at 3.68%, almost 4 percentage points below the same month in 2023, while the average expectations are at 6.25%, in a slow but sustained decline.
In the statement, the BCU specified that future decisions on the rate “will depend on the data on the evolution of the local and international situation and the convergence of inflation expectations to the center of the target range.”
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The rebound after the drought and the international context
Among the variables analyzed by Copom, the rebound in the economic activity. “It continues to exhibit signs of growth, after the effects of the drought, at the impulse of internal consumption and the export sector,” the experts stated in the statement.
With respect to the international scenario, they evaluated that the activity in USA grew less than expected during the first quarter, while the euro zone and China They exhibited greater dynamism than anticipated.
At the regional level, they valued that in Brazil The more vigorous reactivation of the economy made it possible to correct upwards the expectations of growth for the rest of the year 2024. Finally, they maintained that in Argentina a drop in the level of activity is observed in the first months of the year, at the same time that there is a rapid reduction in inflation monthly, according to the economic measures imposed by Javier Milei.
Source: Ambito
