Uruguay’s central bank raised its policy rate to 6% on Thursday, 8 October, citing energy and food shocks tied to geopolitical tensions. The Banco Central del Uruguay (BCU) lifted the rate 25 basis points from 5.75%, despite forecasts that it would hold steady.
The decision puts domestic monetary policy at the center of the response to pressures the bank says are coming through global energy prices, imported goods and international financial markets. Higher rates at major central banks and in international markets also informed the decision, the BCU said. Uruguay’s central bank made the move—not an international institution.
The domestic price picture
Consumer prices rose 4.7% in the year to September, above the BCU’s 4.5% target but still within its 3% to 6% tolerance band. The bank attributed the increase to imported goods, fruit, vegetables and fuel. El Observador, a Montevideo daily, reported annual inflation of 4.68%, citing the national statistics institute, and said prices rose 0.54% in September. Analysts had forecast a 0.35% monthly increase.
The bank said broad price pressure wasn’t evident. Inflation for non-traded goods and services had held steady, according to the BCU, while expectations stayed near its target. Analysts expected inflation of 4.55%, financial traders 4.58% and companies 5%.
Fuel was one of four factors the BCU named behind September’s inflation increase. The statement didn’t specify fuel’s contribution or identify the climate shocks behind its concerns. The bank also published no figures for its new projections.
Who set the rate
The Monetary Policy Committee, known as Copom, includes three board members and three senior officials. It said the “proliferation and persistence” of geopolitical and climate shocks posed a relevant risk to prices and expectations.
The three-member board voted unanimously. President Guillermo Tolosa led it, alongside 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 the decision Thursday evening, highlighting the BCU’s aim of keeping inflation expectations anchored as shocks multiply.
The BCU said it didn’t intend the increase to reverse temporary rises in energy and food prices. Instead, the move was meant to limit how long those increases last and stop them from feeding into other prices. The bank called monetary policy at 6% still “expansionary.” It projected inflation would remain above target for a time, stay within the tolerance band and return to 4.5%; it also expected economic growth around its trend rate.
External pressures and open questions
The decision reverses part of an easing cycle that took the policy rate down from 9.25%. The BCU cut rates seven times between July 2025 and March 2026, then held at 5.75% four times. Its previous increase came on Tuesday, 8 April 2025, when it raised the rate to 9.25%. Inflation later fell to 3.46% by January 2026, near the tolerance band’s bottom.
The U.S. Federal Reserve’s September increase took effect on 17 September, setting the 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 if it expected further increases. Early Friday, the peso’s and local bond yields’ reaction remained unclear. October inflation data were due in early November. The statement also didn’t call the new stance “contractive,” a term the BCU used during tighter policy in 2025.