SAN FRANCISCO: Uruguay’s central bank has resumed its easing cycle with a half-point cut to its benchmark interest rate after inflation rose at the slowest pace since 2005.

The central bank said it lowered the key rate by 50 basis points to 8.50% following a pause in February, thanks to a gradual drop in inflation expectations and a sustained slowdown in consumer price increases that’ve stayed within the 3% to 6% target.

The move on Wednesday marked the central bank’s biggest since a half-point reduction last October.

Monetary policy going forward will seek “to keep inflation in the centre of the target range” and achieve the convergence of inflation expectations with the central bank’s 24-month policy horizon, policymakers said in a statement after their decision.

Receding inflation across Latin America has allowed central banks to lower interest rates. Mexico was the last major inflation targeting central bank in the region to join the rate cutting club in March.

 - Bloomberg