Uruguay Monetary Policy Rate

Uruguay’s central bank raised its monetary policy rate by 25 bps to 6.0%, aiming to keep inflation expectations anchored and bring inflation toward the 4.5% target over the two-year monetary policy horizon. The bank said international geopolitical tensions continue to push up energy prices and, indirectly, those of other tradable goods, contributing to upward revisions in inflation expectations. Against this backdrop, rates at major central banks and in international financial markets have also moved higher. Domestically, the economy is showing signs of resilience after sector-specific and weather-related shocks temporarily affected activity. The bank said inflation remains on a convergent path toward the target as these temporary effects fade, but warned that persistent geopolitical and climate-related shocks pose significant risks to prices and inflation expectations.

The Central Bank of Uruguay kept its policy rate unchanged at 5.75% at its July 2026 meeting, noting that its inflation projections and agents’ expectations remain aligned with the 4.5% target over the Monetary Policy Horizon. The bank noted that inflation stood at 4.27%, while core inflation showed a moderate increase without evidence of second-round effects from recent external shocks. Meanwhile, two-year inflation expectations remained aligned with the target. The international environment continues to be characterized by high uncertainty stemming from geopolitical tensions surrounding the conflict in the Middle East and its impact on commodity prices. In Uruguay, economic activity is evolving below potential growth, while the labor market remains relatively stable. The Monetary Policy Committee assessed that the current policy stance remains appropriate to preserve price stability and keep expectations anchored to the target over the monetary policy horizon.

The Central Bank of Uruguay kept its policy rate unchanged at 5.75% at its June 2026 meeting, as its projections continue to place inflation on a path toward convergence with the 4.5% target over the monetary policy horizon. Inflation expectations also remained aligned with the central bank’s objective. Annual inflation rose to 3.77% in May, driven by higher administered prices, particularly energy, reflecting the impact of global supply shocks. Core inflation edged up to 3.6%, though policymakers noted no significant second-round effects. Easing geopolitical tensions in the Middle East reduced global financial volatility and pressure on energy prices. Labor market and income indicators remained resilient, while economic activity continued to expand. The central bank said inflation is likely to rise in the short term, but the balance of risks remains broadly balanced over the policy horizon. Future policy decisions will depend on incoming inflation data and its underlying dynamics.