Montevideo, August 15 (.). – The Central Bank of Uruguay (BCU) announced on Tuesday a 75 basis point cut in interest rates to put them at 10%, while maintaining the “deflationary phase” of that country’s monetary policy.
This was detailed by the Monetary Regulatory Authority of the South American country in a statement in which it highlighted the decline in inflation in July to 4.79%, with a decrease in all its components, making it 4.8 percentage points lower than in the same month last year. 2022 and at its lowest level in the last 17 years.
The document adds that the average inflation indices over a period of 24 months remained stable in July (7.10%), which highlights the recent decline in inflation that analysts expected in the survey conducted by the BCU, in a “slow but continuous” trend.
“COPOM expects that in the coming months the decline in year-on-year inflation and expectations will continue to decline. Inflation expectations for the monetary policy horizon (24 months) remain within the target range.” Statement.
According to the BCU, the yield curve for letters of monetary regulation (LRM) was revised downward, from an average of 11.0% in June to an average of 10.6% in July.
Likewise, this curve remained inverted, with rates ranging between 10.8% and 10.0% at the 30-day and two-year decades, respectively.
And he continued, “With regard to the decision taken, aspects of the international, regional and local situation were assessed (…). Inflation continues its downward trend after the price of commodities stabilized at pre-pandemic levels.”
Meanwhile, the University of British Columbia expects the country’s economic activity to overcome the impact of drought, which will be reflected in the measurement for the second quarter, and will rebound in the third quarter after reversing “that shock” and the implementation of Finland’s UPM (HE:) second paper mill.
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