Central Bank of Paraguay holds policy rate at 5.50%

The Central Bank of Paraguay said on July 23, 2026 that its Monetary Policy Committee (CPM) unanimously held the monetary policy rate (TPM) at 5.50%, saying a neutral stance remained appropriate as domestic activity has outperformed earlier expectations and inflation projections were revised lower, even as external risks have increased. After 25 basis point cuts in January and February that took the TPM from 6.00% to 5.50%, the CPM has left the rate unchanged since March. The latest Monetary Policy Report raised the 2026 GDP growth forecast to 4.5% from 4.2%, with the economy showing stronger performance in the first five months of the year and the Monthly Indicator of Economic Activity of Paraguay (IMAEP) up 1.9% year on year in May, while June consumer prices fell 0.3% on the month, leaving headline inflation at 2.1% year on year, below the 3.5% inflation expectation for both the next 12 months and the policy horizon. The central bank also lowered its 2026 inflation forecast to 3.3% from 3.5%, citing weaker non-energy goods inflation, particularly non-food goods. Externally, Brent oil rose to around USD 100 a barrel after renewed geopolitical tensions in the Middle East, agricultural commodity prices also increased, and while US inflation eased in June, markets still expect a somewhat higher Federal Reserve rate path, with the DXY broadly stable and longer-dated US Treasury yields higher. The CPM said it will continue to closely monitor risks from the external environment a