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 at 6.00% on February 21, 2025, citing continued positive economic activity, January inflation driven mainly by volatile basket items that it said could correct in coming months, and the rapid convergence of inflation expectations to the new 3.5% target over the monetary policy horizon; the TPM was also left at 6.00% in January 2025. Annual inflation stood at 3.8% in January, while core inflation excluding food and energy commodities was 3.9%; monthly inflation was 1.0%, and 12-month inflation expectations were 3.7%, with expectations at the policy horizon at 3.5%. On activity, the Monthly Indicator of Economic Activity grew 0.2% year on year in December, with services, livestock production and construction supporting growth, and the Consumer Confidence Index rose to 56.94 in January 2025. Externally, the CPM said the Federal Reserve held its target range at 4.25%-4.50%, expects greater caution in the pace of U.S. rate adjustments in 2025, and noted that oil and soybean prices have fallen in recent weeks while the U.S. dollar and long-term Treasury yields were lower than at the previous meeting. The committee reiterated that it will closely monitor domestic and international developments and implement timely measures to ensure compliance with the 3.5% inflation target.