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Inflation Outlier Uruguay Wants to Rein In Prices -- For Good

  • Uruguay central bank chief sees tighter policy on the horizon
  • Economy bounced in May, starting V-shaped recovery, Labat said
Diego Labat, chairman of Uruguay’s Central Bank, speaks during an interview in Montevideo, Uruguay, on Wednesday, June 10, 2020.
Diego Labat, chairman of Uruguay’s Central Bank, speaks during an interview in Montevideo, Uruguay, on Wednesday, June 10, 2020.Photographer: Santiago Mazzarovich/Bloomberg

Uruguay is setting eyes on an ambitious plan to rein in price pressure after becoming one of a handful of countries in the world with double-digit inflation.

The South American nation plans to tighten its monetary policy once the pandemic recedes and it’s considering returning to a system of benchmark interest rate it dumped in 2013, Central Bank Chairman Diego Labat said in an interview. The bank is committed to apply its “full arsenal” to reach the 3%-7% target inflation target within its 24-month policy horizon, which Uruguay has missed since early 2018.

“Rebuilding credibility is fundamental,” Labat, who took over the role in March with the new government of President Luis Lacalle Pou, said.