The BCU equilibrium between activity, inflation and interest rates

URUGUAY - Report 17 Jan 2023 by Esteban Fernández Medrano

We review in this report the latest activity and inflation indicators that determine the BCU interest rate policy in order to get a sense of what to expect from the next COPOM meeting, to be held on February 15, 2023. These indicators reaffirm our perspective that both inflation and growth are declining.

Although the Monetary Policy Committee decided at its most recent meeting to raise the reference rate once again, it did so only by 25bps and stated that “in the current context, no new increases are envisioned”. This seems to confirm that the monetary authority has come to the likely end of its interest rate rally.

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