Uruguay Holds Key Interest Rate

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.

The Central Bank of Uruguay kept its benchmark interest rate unchanged at 5.75% at its May 2026 meeting, aiming to ensure inflation converges to the 4.5% target and to keep expectations anchored. Annual inflation stood at 3.16% in April, while core inflation reached 3.45%, continuing the convergence process toward the target. Two-year inflation expectations from analysts and financial markets remained anchored at 4.5%, while companies’ expectations stood at 5%, bringing the overall average to 4.67%. Globally, persistent conflict in the Middle East continued to keep energy prices elevated and volatile, while higher long-term interest rates created a less favorable environment for emerging markets. Domestically, available indicators pointed to a recovery in economic activity and employment in the first quarter, with moderate growth expected for the rest of the year. Still, the central bank noted that inflation risks had shifted slightly to the upside due to persistently high oil prices.

The Central Bank of Uruguay keeps its policy rate at 5.75% in April 2026, aiming to drive inflation toward the 4.5% annual target amid high global uncertainty. Inflation stood at 2.94% in March, hitting the floor of the tolerance range due to falling food prices, while core inflation accelerated to 3.5%. Economic activity shows signs of improvement in the first quarter, driven by private consumption. BCU projections suggest inflation will face upward pressure next year due to volatile oil prices and logistics costs stemming from the Middle East conflict. However, with analyst expectations anchored at 4.5% and firms at 5%. The Board emphasized that monetary policy is in a solid position to monitor international risks and ensure inflation converges to the target as projected.