Macroeconomic Forecast Uruguay

BMI View: Uruguay's key money supply aggregates show that liquidity is still being pumped into the economy at a considerable rate, with M1 and M2 data showing growth of 25.0% and 31.4% y-o-y respectively in January. With the pace of money supply growth continuing to rise, we caution that the authorities risk storing up additional inflationary problems further down the line, and could result in upside risks to our forecast for the current policy rate of 6.50% to be raised 100 basis points during 2011.

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