MercoPress. South Atlantic News Agency

Uruguay leaves benchmark rate at 8.75% on persistent concern with inflation

The focus continues on stability of internal prices said the Central bank statement

Uruguay's central bank held its benchmark interest rate steady at 8.75% on Tuesday, citing “reasonable” economic growth and persistent concern about inflation expectations above target.

The Central bank also held the rate steady at its last quarterly rate-setting meeting in March, meaning the last change was December's surprise hike of 75 basis points.

“Uruguay's economy has again shown reasonable growth, maintaining a high use of resources and firm domestic demand. At the same time, there is a noticeable increase in credit - both in local and foreign currency,” the bank said in a statement.

“For that reason, the focus continues to be the stability of internal prices and the need to maintain prudence on policy decisions,” it added.

“Growing international uncertainty and greater volatility characterize the current global context in which the banking and financial situation of several European countries continues to influence negatively the functioning of world markets”, added the statement.

Consumer prices rose 8% in the 12 months through June, just below May's 8.06% 12-month reading but still outside the central bank's 2012 target range for between 4% and 6%.

Tuesday's decision to keep the Monetary Policy Rate (TPM) steady was expected by local and international economists.