Central Bank of Paraguay Holds Interest Rate at 5.5%, Inflation Remains Low

Investing.com - The Central Bank of Paraguay kept the benchmark interest rate unchanged at 5.5% on Friday, maintaining a neutral monetary policy stance amid low inflation and slowing economic growth.

This decision aligns with analysts’ expectations, as the central bank has cut rates twice by 25 basis points since January. Paraguay’s inflation target is 3.5%, with a tolerance range of plus or minus 2 percentage points. In February, year-over-year inflation was 2.3%, with core inflation reaching 2.1%.

In January, Paraguay’s monthly economic activity indicator grew by 0.9% year-over-year, mainly driven by positive performance in agriculture, electricity, water services, and the service sector. Commercial data estimates showed a 0.2% year-over-year increase. February’s monthly inflation rate was 0%, with rises in education services and vegetable prices offset by declines in food and fuel costs.

The Monetary Policy Committee stated it will continue monitoring international energy prices, as oil prices have risen above $100 per barrel due to escalating conflicts in the Middle East. The committee noted that economic activity in January continued to expand, but the year-over-year growth rate slowed due to a higher base effect.

The central bank said it will keep monitoring domestic and international developments to assess their impact on inflation and take timely measures to achieve the 3.5% target. The next Monetary Policy Committee meeting is scheduled for April 21, 2026.

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