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 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.