Central Bank of Paraguay Holds Policy Rate at 6.00%

The Central Bank of Paraguay’s Monetary Policy Committee (CPM) unanimously held the monetary policy rate (TPM) at 6.00% on March 21, 2025, citing continued positive momentum in economic activity, February inflation driven mainly by specific price increases such as fuels, and inflation expectations that remain around the 3.5% target over the monetary policy horizon; the TPM was also held at 6.00% in January and February 2025. Domestically, the Monthly Indicator of Economic Activity (IMAEP) rose 6.7% year on year in January, or 8.7% excluding agriculture and electricity generation, supported by manufacturing, construction, services and livestock, while the Large Companies Sales Indicator increased 6.5% and the Consumer Confidence Index stayed in optimism territory at 50.5 in February. Consumer price inflation was 0.4% month on month in February, with annual inflation at 4.3%, while core inflation was 3.6% and inflation excluding food and energy was 4.1%; 12-month inflation expectations stood at 3.7% and expectations over the monetary policy horizon at 3.5%. Externally, the Federal Reserve kept rates at 4.25%-4.50%, while the USD and long-term U.S. Treasury yields declined amid uncertainty over the impact of U.S. trade policies on global growth. The CPM also noted that crude oil and agricultural commodity prices fell on better supply prospects and expectations of weaker world demand linked to greater trade restrictions, and it reiterated that it will keep closely monitoring dome