- Decision
- Lower
- Rate change
- 25 bps
- policy interest rate
- 5.75%
The Central Bank of Paraguay’s Monetary Policy Committee (CPM) unanimously cut the monetary policy rate (TPM) by 25 basis points to 5.75% from 6.00% on January 23, 2026, judging that inflationary pressures have moderated, inflation is expected to keep decelerating through most of 2026 and converge to the 3.5% target by year-end, and inflation expectations have consolidated around that target while monetary policy remains neutral; after holding the TPM at 6.00% from January through December 2025, the CPM eased in January 2026. December consumer price inflation was -0.3% month on month and 3.1% year on year, while CPI excluding food and energy rose 0.2% on the month and 2.3% on the year, and expectations for both the next 12 months and the monetary policy horizon stood at 3.5%. The CPM said economic activity kept positive momentum in the fourth quarter of 2025, consistent with a 6.0% growth estimate, and projected 2026 GDP growth at 4.2%, with November IMAEP up 4.0% year on year and the Large Companies Sales Indicator rising 6.3%. Externally, it cited resilient global activity amid heightened uncertainty, with the International Monetary Fund estimating 2025 growth at 3.3% globally and 2.4% in Latin America and the Caribbean, while oil prices rose on geopolitical tensions, soybean prices increased, the U.S. dollar index appreciated slightly and long-term U.S. Treasury yields rose. The CPM reiterated that it will closely monitor domestic and external developments and take timely measures to ensure compliance with the 3.5% target over the monetary policy horizon.
Rate evolution
On 23 July 2026, the Central Bank of Paraguay’s Monetary Policy Committee unanimously maintained the policy rate at 5.50%, saying the level was consistent with a neutral monetary policy stance. The committee said economic activity had performed better than expected in the first five months of the year and raised its 2026 gross domestic product growth forecast to 4.5% from 4.2%, while lowering its inflation forecast to 3.3% from 3.5% and flagging risks from higher oil prices and expectations of policy rate increases by the United States Federal Reserve.
On 25 August, the committee again unanimously held the policy rate at 5.50%, maintaining a neutral monetary policy stance. It said economic activity remained consistent with the 4.5% growth forecast, while headline inflation declined to 1.6% in July and inflation expectations remained anchored at 3.5%, although uncertainty over international energy prices persisted and markets anticipated a somewhat higher path for Federal Reserve interest rates.
On 21 September, the committee unanimously kept the policy rate at 5.50%, judging it consistent with a neutral monetary policy stance as economic activity maintained a favorable performance in line with the 4.5% growth forecast. Headline inflation eased to 1.5% in August, while inflation expectations remained aligned with the 3.5% target, and the committee continued to project inflation of 3.3% at year-end and convergence to the target over the policy horizon, while flagging risks from petroleum product prices, the conflict in the Middle East and expectations of another federal funds rate increase during the remainder of the year.