The Central Bank of Paraguay’s Monetary Policy Committee (MPC) unanimously held the monetary policy rate at 5.50% annually, maintaining a neutral stance as economic activity remained favorable and inflation low. The MPC has kept the rate unchanged since cutting it by a cumulative 50 basis points in January-February from 6.00%. Headline inflation stood at 1.6% year on year in July, while expectations remained anchored at the 3.5% target; the MPC expects inflation to rise gradually to 3.3% in December 2026 and converge to the target over the policy horizon. Economic activity grew 5.6% year on year in June and remained consistent with the 4.5% growth projection for 2026. Externally, elevated energy prices and Middle East tensions continued to create uncertainty, while agricultural commodity prices increased and markets anticipated a somewhat higher US Federal Reserve rate path. The MPC will continue monitoring domestic and external developments and take timely measures to ensure inflation meets the target.
Central Bank of Paraguay Holds Policy Rate at 5.50%
The Central Bank of Paraguay’s Monetary Policy Committee unanimously held the monetary policy rate at 5.50%, maintaining a neutral stance amid favorable economic activity and low inflation. Headline inflation was 1.6% year on year in July, while expectations remained anchored at the 3.5% target and economic activity grew 5.6% in June.