September 16, 2020
Central Banks latest publications
After announcing the changes to the Longer-Run Goals and Monetary Policy Strategy in the intermeeting period, the FOMC followed up with a very dovish statement at the September meeting.
The rate of inflation in Uruguay has dropped significantly in recent decades but still remains high. The Monetary Policy Committee announced that it will use the interest rate as an instrument of monetary policy and set it at 4.5% per year. It also ratified the new target range of 3% to 6% from September 2022.
The course begins with the hope that the worst of the pandemic and the greatest economic impacts are behind us. The combination of unprecedented monetary and fiscal stimuli has been key to softening the impact of the crisis. With the emergency behind us, central banks are reviewing their strategies.
The Board of the Central Bank decided to maintain the monetary policy rate at 0,25% in September. The Bank renewed its commitment to maintain a strongly expansive stance for a prolonged period and placed emphasis on its efforts to provide liquidity to the market.
The meeting did not provide any surprises on the reaction by the ECB to the hottest topics - inflation figures and the appreciation of the euro. The ECB continues to be very cautious but does not seem to be ready to extend the PEPP for the moment, unless further risks on the pandemic and on the economy materialize.
The global economic scenario is defined by low growth, inflation & interest rates below what central banks would like, and a global pandemic. All of this has a lot to do with action against climate change.
Lima's Consumer Price Index fell 0.11% m/m in August, in line with our expectations and the market (Bloomberg Consensus: -0.08% m/m), the second lowest figure so far this year. With this result, year-on-year inflation decreased to 1.7%, compared to 1.9% the previous month.
The Fed released its updated Statement on Longer-Run Goals and Monetary Policy Strategy, which reflect changes in the economy over the past decade and explains how policymakers are planning to conduct monetary policy. The statement also enhances transparency, accountability and effectiveness of monetary policy.