The Central Bank of Uruguay’s Monetary Policy Committee lowered the monetary policy rate by 100 basis points to 6.5%, citing projections that inflation could become misaligned with the target and aiming to ensure monetary conditions support a return to convergence toward the 4.5% annual objective. Inflation ended 2025 at 3.65%, below both private-sector expectations and the Central Bank of Uruguay’s own projection. Two-year inflation expectations continued to decline, with most surveys around the target, including analysts at 4.45%, financial markets at 4.6% and firms at 5.3%. The release also pointed to heightened international policy uncertainty and renewed US dollar weakening, particularly in Latin America, alongside a domestic foreign exchange market that has shown greater sensitivity in recent weeks, with episodic order imbalances, lower liquidity and discrete moves in some segments.
Central Bank of Uruguay 2026-01-26
Central Bank of Uruguay cuts policy rate by 100 basis points to 6.5%
The Central Bank of Uruguay's Monetary Policy Committee reduced the monetary policy rate by 100 basis points to 6.5% to address potential inflation misalignment and support convergence toward the 4.5% annual target. Inflation ended 2025 at 3.65%, below expectations, with declining two-year inflation forecasts and increased sensitivity in the domestic foreign exchange market amid international uncertainty and US dollar weakening.