Uruguay lifts interest rate to 10.25%

Bloomberg

Uruguay’s central bank raised its key interest rate for a ninth consecutive meeting to 10.25% with inflation expectations remaining stubbornly above its target.
Policy makers tightened by 50 basis points and signalled more half point hikes later in the year. The increase marked the first time the central bank lifted borrowing costs into the double digits since it returned to using
a benchmark rate as its main
policy tool in September 2020.
With further tightening, the key rate “would reach the end of the year at levels consistent with the convergence of expectations toward the target range,” the central bank said in a statement.
The central bank didn’t rule out adopting an even more restrictive policy bias if inflation expectations are slow to approach its 3%-6% target.
Easing commodities prices, especially oil, have yet to translate into a significant cooling of
inflation across Latin American.
Countries like Uruguay, Chile and Mexico are expected to keep tightening monetary policy in second half of year. Last month, inflation in Uruguay accelerated to 9.56% led by rising prices for food, healthcare and tourism services.
July marked the fastest inflation since the 9.59% observed in November 2020.
Policy makers said the economy continues to expand in the third quarter, but at a slower pace than that observed in the April-June period.