Bloomberg News

Uruguay May Keep Rate on Hold to Gauge Impact of European Crisis

December 29, 2011

Dec. 29 (Bloomberg) -- Uruguay’s central bank will probably keep its benchmark interest rate at 8 percent today as policy makers wait to gauge the full impact of Europe’s debt crisis on economic growth and inflation.

The five-member policy board, led by bank President Mario Bergara, will leave the rate on hold for a second meeting after raising it from 7.5 percent in June, according to three of five economists surveyed by Bloomberg. One analyst forecast an increase to 8.5 percent and one expected a half-point cut. The board will announce its decision about 3 p.m. New York time.

Inflation accelerated to 8.4 percent in November from 7.9 percent the month before, above the upper limit of the central bank’s 4 percent to 6 percent target range for the 23rd month. Europe’s debt crisis has yet to affect the $44 billion economy, which expanded 7.5 percent in the third quarter from the same period last year, the central bank reported Dec. 20.

“The committee will wait to have the information of the fourth quarter of 2011 due next March to make a decision,” said Pablo Moya, an economist at Montevideo-based Oikos Research Co. “It remains to decipher what will be the impact of the international crisis on the country.”

Inflation will slow to 7 percent next year from 8.2 percent in 2011, according to the median estimate in a central bank survey of 11 economists, banks, pension administrators and industrial chambers released Dec. 14.

“The Policy Committee will keep the interest rate unchanged given the high inflation rate,” said Ramon Pampin, an economist at PricewaterhouseCoopers in Montevideo.

Bergara said on Dec. 8 that the government is determined to stem price increases.

“The central bank will take steps to make credible its policy of price stability, but we are in a very volatile and increasingly uncertain context,” Bergara told reporters in Montevideo. “Therefore, we must balance inflationary pressures with productive and competitive aspects.”

The Policy Committee will next meet in March.

--Editors: Philip Sanders, Harry Maurer

To contact the reporter on this story: Lucia Baldomir in Montevideo at

To contact the editor responsible for this story: Joshua Goodman at

Steve Ballmer, Power Forward
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