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 June 24, 2025, citing positive economic momentum, inflation expectations that remain aligned with the 3.5% target over the monetary policy horizon, and heightened external uncertainty from Middle East tensions and oil price volatility; the TPM has been unchanged at 6.00% since January 2025. The CPM said economic activity remained dynamic, with the Monthly Indicator of Economic Activity (IMAEP) rising 3.3% year on year in April, in line with its 4.0% GDP growth projection, while the Large Companies Sales Indicator increased 3.7% and the Consumer Confidence Index stayed in the optimism zone at 53.5 in May. May consumer price inflation was 0.0% month on month, with annual inflation at 3.6% and the IPCSAE measure at 4.3%, while 12-month inflation expectations eased to 3.7% and expectations over the policy horizon remained aligned with the 3.5% target. Externally, the CPM noted that in the United States job creation in May exceeded expectations, inflation rose to 2.4% and the Federal Reserve kept the federal funds target range at 4.25%-4.50% while projecting 50 basis points of cuts in the second half of the year; it also highlighted that geopolitical tensions in the Middle East have increased uncertainty around crude oil and derivative prices, while wheat prices rose and soybean and corn prices fell. The Committee reiterated that it will continue to closely mo