- Decision
- Maintain
- Rate change
- 0 bps
- policy interest rate
- 5.5%
The Central Bank of Paraguay’s Monetary Policy Committee (CPM) unanimously left the monetary policy rate (TPM) unchanged at 5.50% on May 22, 2026, saying short-term activity indicators remain favorable and inflation is temporarily below the 3.5% target but should converge toward it in the second half of the year, while external uncertainty persists. After two 25 bp cuts in January and February from 6.00% to 5.50%, the CPM has held the rate unchanged since March. The Committee said the decision keeps monetary policy consistent with a neutral profile. Domestically, it cited projected gross domestic product growth of 4.2% for the year, March growth in the Monthly Indicator of Economic Activity of Paraguay (IMAEP) of 8.2% year on year, April headline inflation of 2.3% year on year, and inflation expectations anchored at 3.5% for both the next 12 months and the policy horizon. Externally, it noted a slight appreciation in the US dollar index and higher long-term US Treasury yields, while highlighting persistent uncertainty over the Middle East conflict and higher oil and agricultural commodity prices, with Brent crude around USD 107 per barrel. The CPM said it will continue to closely monitor external risks and take timely measures to ensure inflation converges to 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.