The Central Bank of Uruguay’s decision to lower the benchmark interest rate to 8.00% in November 2025 represents a cautious easing stance. This follows a peak of 9.25% in April 2025 and a steady decline over the past seven months. The rate cut is the first since July 2025 and signals confidence in moderating inflation pressures while supporting economic activity.

Drivers this month

• Inflation slowed to 7.10% YoY in October, down from 7.80% in September.
• GDP growth forecast revised upward to 2.80% for 2025, from 2.40% earlier.
• Stable exchange rate with the UYU/USD pair fluctuating within a narrow 0.50% band.
• Moderate fiscal deficit at 3.20% of GDP, supported by improved tax revenues.

Policy pulse

The 8.00% rate remains above the estimated neutral rate of 7.00%, indicating a still moderately restrictive monetary stance. This supports the BCU’s inflation target range of 3-7%, with inflation expectations gradually aligning closer to the midpoint.

Market lens

Immediate reaction: The UYU appreciated 0.30% against the USD within the first hour post-announcement, while 2-year government bond yields fell by 12 basis points, reflecting market approval of the measured easing.

Core macroeconomic indicators provide essential context for the interest rate decision. Uruguay’s inflation rate has moderated steadily from a peak of 9.50% YoY in early 2025 to 7.10% in October. This deceleration is driven by lower food and energy prices, which contributed 0.40 and 0.30 percentage points less to inflation compared to last quarter.

Inflation and growth trends

• Consumer Price Index (CPI) YoY: 7.10% (Oct 2025), down from 7.80% (Sep 2025).
• GDP growth forecast for 2025: 2.80%, improved from 2.40% in August 2025.
• Unemployment rate steady at 7.50%, near historical lows.

Fiscal policy & government budget

The government’s fiscal deficit narrowed to 3.20% of GDP in Q3 2025, compared to 3.80% in Q2. Revenue gains from export taxes and improved VAT collections have bolstered the budget, allowing room for targeted social spending without jeopardizing debt sustainability.

External shocks & geopolitical risks

Global commodity price volatility remains a risk, but Uruguay’s diversified export base and stable trade relations with Brazil and China mitigate exposure. Geopolitical tensions in Latin America have not materially affected capital flows or investor sentiment.

Comparing the current rate with historical data, the BCU has reduced rates by a cumulative 1.25 percentage points since April. This aligns with a 0.70 percentage point decline in inflation over the same period. The correlation suggests the central bank’s policy is responsive and data-driven.

Market lens

Immediate reaction: UYU/USD strengthened by 0.30%, while 2-year bond yields dropped 12 basis points, reflecting market confidence in the BCU’s calibrated easing.

Looking ahead, Uruguay’s monetary policy faces a complex environment. Inflation is expected to continue easing toward the 5% midpoint target by mid-2026, but external risks remain. The BCU’s next moves will depend on inflation trajectory, fiscal discipline, and global economic conditions.

Bullish scenario (30% probability)

• Inflation falls below 5% by Q2 2026.
• GDP growth accelerates to 3.50% supported by investment.
• Further rate cuts totaling 50 basis points by mid-2026.

Base scenario (50% probability)

• Inflation stabilizes around 5-6% through 2026.
• GDP growth steady at 2.50-3.00%.
• Rates remain near current levels with minor adjustments.

Bearish scenario (20% probability)

• Inflation surprises upward due to commodity shocks.
• Growth slows below 2% amid external headwinds.
• Potential rate hikes of 25-50 basis points in late 2026.

Uruguay’s November 2025 interest rate decision reflects a prudent shift toward easing amid improving inflation and growth prospects. The BCU’s data-driven approach balances risks from external shocks and fiscal pressures. Financial markets responded positively, signaling confidence in the central bank’s strategy. Going forward, close monitoring of inflation trends and external developments will be critical to guide policy adjustments.

Key Markets Likely to React to Interest Rate Decision

Several markets are poised to respond to Uruguay’s interest rate outlook. The UYU/USD forex pair typically reacts to monetary policy shifts, while local government bonds reflect yield adjustments. Additionally, regional equities and commodities linked to Uruguay’s export sectors may see volatility. Monitoring these assets offers insight into market sentiment and risk appetite.

• UYUUYU – Uruguay Peso/USD currency pair, sensitive to interest rate changes.
• MERVAL – Argentine stock index, correlated due to regional economic ties.
• BVMF3.SA – Brazilian exchange-traded stock, impacted by regional monetary trends.
• BTCUSD – Bitcoin/USD, a risk sentiment barometer globally.
• USDBRL – USD/Brazilian Real, reflecting regional currency dynamics.

FAQs

What was Uruguay’s latest interest rate decision?

The Central Bank of Uruguay cut the policy rate to 8.00% on November 18, 2025, down from 8.25% in October.

How does this decision compare historically?

This is the first rate cut since July 2025 and continues a downward trend from a peak of 9.25% in April 2025.

What are the macroeconomic implications of this rate change?

The cut signals confidence in moderating inflation and supports growth, while maintaining a moderately restrictive stance to anchor inflation expectations.

Key takeaway: Uruguay’s measured rate cut reflects improving inflation control and a balanced approach to sustaining growth amid moderate external risks.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.