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 August 22, 2025, saying the favorable evolution of activity and demand in the first half of 2025, together with softer recent monthly inflation and trend indicators than earlier in the year, supports a view that inflation will remain within the target range in 2025 and converge toward the 3.5% target from 2026. The decision extended the unchanged 6.00% stance maintained at every prior 2025 meeting from January through July. In July, consumer price inflation was 0.4% on the month and 4.3% on the year, while inflation excluding food and energy commodities stood at 3.8% on the year and inflation expectations remained at 3.7% for the next 12 months and 3.5% over the monetary policy horizon; the CPM added that GDP is around its potential and cited June IMAEP growth of 4.8% year on year, with reduced exchange-rate pressures and an appreciating exchange rate contributing to lower durable goods prices. Externally, the CPM said trade tensions had moderated after recent U.S. tariff agreements, markets increasingly saw Federal Reserve rate cuts resuming in September after weaker U.S. labor data, and oil prices had fallen since the previous meeting after OPEC+ increased production. The CPM reiterated that it will closely monitor domestic and international developments and take timely measures to ensure compliance with the 3.5% target over the monetary policy horizon.