MercoPress. South Atlantic News Agency

Uruguay Central Bank accelerates easing, cuts key rate to 6.5% as dollar hits lows

Dollar trades near May 2024 levels in Uruguay, at 38.62 pesos buy and 40.58 sell. The currency fell about 11% in 2025 and a further 4% so far in 2026.

Uruguay’s Central Bank (BCU) cut its benchmark policy rate by 100 basis points to 6.5% and said monetary policy “enters an expansionary phase,” framing the move as a way to prevent inflation from drifting away from its 4.5% target and to respond to recent strains in the foreign-exchange market.

The decision deepens an easing path that local reporting says now totals six consecutive reductions since mid-2025, and comes with an unusual scheduling change: the bank brought forward its monetary policy committee meeting and added an extra session in March to retain “flexibility” if volatility resurfaces.

The BCU said 2025 inflation closed at 3.65%, below its goal and below market expectations, while two-year inflation forecasts moved closer to target in surveys of analysts and financial markets. Against that backdrop, the bank pointed to heightened global “policy uncertainty” that has fueled “renewed weakening of the dollar,” particularly in Latin America, a dynamic that in Uruguay has been amplified by “lower liquidity” and “discrete moves” in parts of the FX market.

The exchange rate has been central to the narrative. Uruguayan outlets reported the dollar trading around 38.622 pesos on the buy side and 40.58 on the sell side in the interbank market, near levels last seen in May 2024. The same coverage said the currency fell roughly 11% in 2025 and about 4% so far in 2026.

BCU President Guillermo Tolosa had already warned in October that “peso appreciation is a challenge” while inflation was running below target. The central bank reiterated that if “exceptional” domestic conditions reappear, it could pair the rate stance with other tools to preserve “orderly conditions” and keep inflation within its tolerance band.

Uruguay’s pivot comes as the dollar has faced headwinds globally as well: the dollar index ended 2025 down about 7% amid heightened sensitivity to policy signals.

For markets, the immediate test is whether faster easing supports credit and activity without reigniting price pressures or aggravating the FX volatility the BCU described as “anomalous” in recent weeks. With an additional March meeting now on the calendar, the bank has left the door open to recalibrate the expansionary bias if the exchange rate and expectations move off track again.