By Malena Castaldi and Felipe Llambias
MONTEVIDEO May 21 Uruguay's main economic
problem is high inflation, and policymakers will continue to use
interest rates and bank reserve requirements to bring it under
control, Vice President Danilo Astori said on Tuesday.
Consumer prices in the small South American country rose
8.14 percent in the 12 months through April, far outside the
country's official annual target range of 4 to 6 percent.
"It is the main macroeconomic problem of Uruguay," Astori
told the Reuters Latin America Investment Summit. "But we cannot
be distracted at all, we have to keep the target range between 4
and 6 percent, and that's what we're doing"
The economy grew 3.9 percent in 2012 after rising 6.5
percent in 2011. Despite slower growth, consumer prices remain a
concern for policymakers.
The central bank raised its benchmark interest rate by 25
basis points to 9.25 percent in December and then held it there
in March, when it raised marginal reserve requirements on local
and foreign currency deposits.
Banks in the country have to abide by a marginal reserve
requirement of 25 percent for deposits in Uruguayan pesos, up
from an earlier 20 percent. The requirement for foreign currency
rose at the start of April to 45 percent from 40 percent.
"We do not have any planned policy changes on the table,
but we will be monitoring developments," Astori said. "We trust
in the sustainability of the measures we are taking and believe
they will give positive results over time."
Uruguay's marginal reserve requirements refers to the growth
of deposits since April 2011, when the central bank introduced
the scheme to expand its monetary policy tools.
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