Uruguay’s central bank raised its policy rate to 6% on Thursday, 8 October, after imported goods, fruit, vegetables and fuel helped push annual consumer-price growth to 4.7% in September. The Banco Central del Uruguay (BCU) said the 25-basis-point increase aimed to stop energy and food price shocks from spreading to other prices.
Imported Costs, State Response
The rate climbed from 5.75%, against forecasts that the bank would leave it unchanged. The BCU said it acted early, while describing monetary policy at 6% as still “expansionary.” Its projections showed inflation staying above the 4.5% target for a time, remaining within the 3% to 6% tolerance band, then returning to target within two years.
Consumer prices rose 4.7% in the year to September, the bank reported. El Observador, a Montevideo daily, reported annual inflation of 4.68%, citing the national statistics institute, and a 0.54% monthly increase in September. Analysts had expected a monthly increase of 0.35%.
Fuel was one of four factors the BCU named behind September’s inflation increase. The bank didn’t say how much of the increase came from fuel, nor did it identify the climate shocks cited in its concerns. Its statement said geopolitical tensions were pushing up energy prices and, indirectly, the cost of other traded goods.
Expectations and the Interest-Rate Record
The BCU said it saw no broad price pressure and noted that inflation for non-traded goods and services had stayed stable for months. Two-year inflation expectations sat near the target: analysts expected 4.55%, financial traders 4.58%, and companies 5%.
The Monetary Policy Committee, known as Copom, said the “proliferation and persistence” of geopolitical and climate shocks posed a relevant risk to prices and expectations. The BCU said it wasn’t trying to reverse temporary rises in energy and food prices, but to limit their duration and prevent them from feeding into other prices.
That decision reversed part of a rate-cutting course that had lowered the policy rate from 9.25%. The BCU cut rates seven times between July 2025 and March 2026, then held at 5.75% four times. Inflation fell to 3.46% by January 2026, near the bottom of the tolerance band. The bank last raised rates on Tuesday, 8 April 2025, taking the rate to 9.25%.
What the Decision Leaves Unanswered
The three-member board voted unanimously. President Guillermo Tolosa led it, with Vice-president Ana Claudia de los Heros and director Julio Luis Sanguinetti; the board decides on Copom’s advice. La Diaria, a Montevideo daily, reported that the bank aimed to keep inflation expectations anchored as shocks multiplied.
The U.S. Federal Reserve’s September increase took effect on 17 September, setting its federal funds target range at 3.75% to 4.00%. Uruguay’s 6% policy rate sits about two percentage points above the top of that range. The BCU’s interbank average put the peso at 40.21 per US$1 on Thursday.
The BCU gave no date for its next decision and didn’t say whether further increases were likely. It also didn’t publish figures for its new projections. The statement didn’t describe the policy stance as “contractive,” a term the bank used during tighter policy in 2025. The peso and local bond yields’ reaction on Friday wasn’t yet clear early in the day, and October inflation data were due in early November.