Uruguay Makes Surprising Rate Hike

Uruguay’s central bank tightened its rate by 100bp to 7.50%. Market consensus pointed to a 25bp hike. “The central bank seems to have felt that the balances of risks are now clearly tilted to more inflation, a diagnosis with which we fully agree,” says Barclays. “The central bank concerns are clearly backed by recent data: inflation printed 7.7% y/y in February; 12-month inflation expectations remain above the current target range (4%-6%); unemployment remains at historically low levels; and domestic spending is expanding at a very strong pace,” it adds. Citi was expecting a 50bp hike.