The Central Bank of Uruguay has considered ceasing rate hikes in 2023 in view of the decline in inflation «in the expected direction» in recent months, falling «faster» than expected.
According to the minutes of the central bank’s last monetary policy meeting, held on December 30, at which it was decided to increase interest rates by 25 basis points (to 11.5%), the committee members decided by a large majority to do so, in line with the «pronounced» reduction in year-on-year and core inflation.
«The monetary policy transmission channels continue to function adequately and inflation is declining in the expected direction,» the minutes state.
Among the reasons for the increase, the bank chaired by Diego Labat has pointed to the good performance of the economy, which will grow above 5% in 2022, as well as the «stabilization» of employment figures. However, the monetary policy makers have pointed out that Uruguay’s economy will grow «more in line» with the potential in 2023 and 2024, taking into account the «complex scenario» at regional level.
Thus, the committee has indicated that it will continue to monitor the local and international situation with the aim of ensuring that both inflation and its expectations converge to the target range by the end of the monetary policy horizon.
Source: (EUROPA PRESS)
