- Decision
- Maintain
- Rate change
- 0 bps
- policy interest rate
- 5.5%
The Central Bank of Paraguay said on July 23, 2026 that its Monetary Policy Committee (CPM) unanimously held the monetary policy rate (TPM) at 5.50%, saying a neutral stance remained appropriate as domestic activity has outperformed earlier expectations and inflation projections were revised lower, even as external risks have increased. After 25 basis point cuts in January and February that took the TPM from 6.00% to 5.50%, the CPM has left the rate unchanged since March. The latest Monetary Policy Report raised the 2026 GDP growth forecast to 4.5% from 4.2%, with the economy showing stronger performance in the first five months of the year and the Monthly Indicator of Economic Activity of Paraguay (IMAEP) up 1.9% year on year in May, while June consumer prices fell 0.3% on the month, leaving headline inflation at 2.1% year on year, below the 3.5% inflation expectation for both the next 12 months and the policy horizon. The central bank also lowered its 2026 inflation forecast to 3.3% from 3.5%, citing weaker non-energy goods inflation, particularly non-food goods. Externally, Brent oil rose to around USD 100 a barrel after renewed geopolitical tensions in the Middle East, agricultural commodity prices also increased, and while US inflation eased in June, markets still expect a somewhat higher Federal Reserve rate path, with the DXY broadly stable and longer-dated US Treasury yields higher. The CPM said it will continue to closely monitor risks from the external environment and take the measures needed 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.