Friday, June 24, 2011

Uruguay Central Bank Increases Interest Rate 50bps to 8.00%

The Banco Central del Uruguay increased its benchmark interest rate by 50 basis points to 8.00% from 7.50% previously.  The Bank said: "This decision is necessary to promote a convergence of inflation and expectations with the target range, a process that will contribute to giving more solid fundamentals to the growth and competitiveness of the Uruguayan economy,".

Previously the Bank raised reserve requirements for banks on peso deposits by 300 basis points to 15% and 300 basis points on foreign currency deposits to 18% during its May meeting.  The Bank also increased its interest rate by 100 basis points to 7.50% at its March meeting.  Uruguay reported inflation of 8.53% in May, up from 8.34% in April, and above the Bank's 4%-6% inflation target range (as set by the Macroeconomic Coordination Committee).


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