- Decision
- Maintain
- Rate change
- 0 bps
- policy interest rate
- 5.5%
The Central Bank of Paraguay’s Monetary Policy Committee (CPM) unanimously held the monetary policy rate at an annual 5.50%, maintaining a neutral stance as favorable economic activity and low inflation remained consistent with convergence to target. The rate was lowered by a cumulative 50 basis points from 6.00% in January-February 2026 and has since been held. Headline inflation eased to 1.5% year on year in August, driven mainly by low goods-price inflation, while the CPM projects 3.3% at year-end and convergence to the 3.5% target, with expectations aligned. Economic activity remained consistent with projected growth of 4.5% in 2026, supported in July by services, electricity and water, manufacturing and agriculture. The US dollar appreciated and long-term Treasury yields rose, while Brent crude exceeded USD 100 per barrel amid the escalating Middle East conflict and associated supply risks. Agricultural commodity prices also increased and the Federal Reserve raised its target range. The CPM said it will continue monitoring domestic and external developments and take timely action to ensure inflation meets the target over the 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.