(Bloomberg) -- Uruguay’s central bank left its benchmark interest rate unchanged at 8.5% on Thursday with a view to keep inflation near the midpoint of the target range and guide inflation expectations lower.

The decision followed a 50-basis point cut the previous month that left the key rate at a two-year low. Policymakers have slashed borrowing costs by three percentage points since they kicked off the current easing cycle in April 2023.

“Future decisions will depend on data about the evolution of the situation at home and abroad and the convergence of inflation expectations with the center of the target range” of 3% to 6%, the central bank said in a statement after its decision.

Pension funds and primary dealers surveyed by the central bank forecast a quarter-point cut in August, leaving the key rate at 8.25% through the end of the year.

Latin American central banks have steadily lowered borrowing costs in the last year thanks to receding inflationary pressures. However, the scope for deeper cuts is clouded by latent inflation risks. Chile slowed the pace of easing last month because stronger growth and a weaker peso may stoke inflation. Mexico’s central bank kept borrowing costs unchanged this month after consumer prices accelerated in April.

Uruguay notched 11 consecutive months of inflation within the target range in April. The inflation rate fell to a 19-year low of 3.68% last month, down from 3.8% in March.

Inflation expectations have continued to compress but are still far from where policymakers want them. The most recent survey of analysts by the central bank put inflation at 5.51% at the end of the year and 6% in December 2025.

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