Rate Hiking Cycle Over

We expect the Banco Central del Uruguay (BCU) will hold its monetary policy rate at 8.75% in 2012, following its decision to hike by 75 basis points (bps) in its last policy meeting of 2011. As the global economic slowdown continues, we expect demand and supply side inflationary pressures to subside, bringing price growth down towards our end-2012 inflation forecast of 7.0% y-o-y.

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