Central Bank of Paraguay Holds Monetary Policy Rate at 6.00%

The Central Bank of Paraguay said its Monetary Policy Committee unanimously held the monetary policy rate at 6.00% on January 23, 2025, citing continued positive momentum in domestic activity and demand, favorable behavior in headline and underlying inflation, and lower inflation expectations in line with the reduction of the target to 3.5%, even as the external backdrop points to a more cautious pace of Federal Reserve rate adjustments in 2025 and higher crude oil and agricultural commodity prices. Domestically, the Monthly Indicator of Economic Activity grew 7.5% year on year in November, led by services, manufacturing, construction and agriculture, while December consumer price inflation was 0.7% month on month and 3.8% year on year, with inflation excluding food and energy at 3.7% in annual terms; the Consumer Confidence Index remained in optimistic territory at 53.98 in December. Globally, the committee noted stronger-than-expected U.S. job creation, U.S. inflation at 2.9% in December, broadly unchanged levels for the USD and long-term U.S. Treasury yields versus the previous meeting, and recent increases in oil, soybeans, corn and wheat linked to U.S. sanctions on Russia’s energy sector and less favorable weather in key producing regions. The central bank reiterated its commitment to price stability and said it will continue to closely monitor domestic and international developments and take timely measures to ensure inflation converges to target over the monetary polic