Restricted permissions for the UPDATE queries

Hi! I wanted to test update queries and gave permissions for that for my mcp server user:

GRANT INSERT, UPDATE
ON ALL TABLES IN SCHEMA public
TO "azmcp-postgres-server-...";

But looks like permissions is restricted somewhere else as agent says:

1. Privilege/Permission Check
Your user account (azmcp-postgres-server-...) has UPDATE rights on all tables in the public schema, including "folders".
There is no table-level restriction.
2. Error Message
When executing UPDATE folders SET name = 'other_folder' WHERE name = 'MyFolder';
The system returned:
"Only single read-only SELECT statements are allowed."
This is a system/environment restriction, not a SQL or access-control issue.

Can you point me to the right direction where permissions can be changed?