- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 5.75%
The Board of the Central Bank of Uruguay (BCU) unanimously left the policy rate (Tasa de Política Monetaria) unchanged at 5.75 percent, judging that two-year inflation forecasts remain anchored near the 4.5 percent target while April headline and core inflation, at 3.16 percent and 3.45 percent respectively, continue their convergence toward that goal amid a rebound in first-quarter activity and employment and a still-moderate growth outlook for the remainder of 2026. Following cumulative cuts of 325 bp since October 2025—including a 100 bp reduction in January and a move to 5.75 percent before April—the rate has now been held steady for a second meeting. The committee reaffirmed that the current stance supports further disinflation and expectation anchoring, but warned that the inflation risk balance has shifted “slightly upward” as Middle East conflict keeps energy prices elevated and rising global long-term yields tighten financial conditions for emerging markets. The central bank will monitor these risks closely and stands ready to adjust policy if needed.
Rate evolution
From May 2025 to July 2026, the Central Bank of Uruguay lowered the Monetary Policy Rate by 350 basis points, from 9.25% to 5.75%, moving from a firmly contractionary stance through successive cuts toward neutrality, briefly into an expansionary phase, and then pausing. Early on, it held to reinforce disinflation despite elevated core inflation and expectations still above the 4.5% target, then began easing as headline and underlying inflation moved to around target, expectations fell to record lows and policy credibility strengthened, even while non-tradable prices remained sticky and activity softened or grew around potential. As inflation slipped below target, forecasts were revised down and activity underperformed, the bank accelerated the easing cycle in December 2025 and January 2026, citing weaker domestic import prices, downside growth risks, deeper international policy uncertainty, global USD weakness and episodes of domestic foreign-exchange-market stress, and explicitly said policy had reached neutrality and then become expansionary.
In subsequent decisions, it held at 5.75% as inflation stayed low and expectations remained anchored, but in May 2026 stressed elevated global uncertainty from the Middle East conflict, volatile currencies and commodities, higher oil and logistics costs, rising long-term interest rates and a domestic recovery in activity and employment, judging that inflation risks had tilted slightly upward and signalling it would act if conditions required. On July 1, 2026, the Central Bank of Uruguay again kept the Monetary Policy Rate at 5.75%, saying inflation remained on a path toward the 4.5% target and expectations stayed aligned, while finding no significant second-round effects and judging risks balanced despite upside risks from the international conflict and El Niño-related climate effects and downside risks from further global USD weakness and a sharper slowdown in commodity prices. In the subsequent decision, it unanimously held the rate at 5.75% after annual inflation reached 4.27% in July and underlying inflation rose moderately without second-round effects, noting that some persistent services prices remained elevated, two-year expectations stood at 4.5% among analysts and financial markets and 5% among firms, activity was below potential and the labour market was relatively stable, while geopolitical, commodity-price and adverse climate risks continued to warrant monitoring.