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Paraguay Central Bank Holds Key Rate at 5.50%, Monitors External Risks
🇵🇾 Paraguay /Economy & Trade

Paraguay Central Bank Holds Key Rate at 5.50%, Monitors External Risks

From ABC Color · () Spanish

Translated from Spanish, summarized and contextualized by DistantNews.

At a glance

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  • The Central Bank of Paraguay's Monetary Policy Committee maintained the benchmark interest rate at 5.50%.
  • The decision was based on a favorable domestic economic outlook, with projected growth of 4.2% in 2026 and inflation below the target.
  • However, the bank is monitoring external risks, including fuel prices, oil markets, and the U.S. Federal Reserve's policies.

The Central Bank of Paraguay's Monetary Policy Committee (CPM) has opted to keep the monetary policy interest rate (TPM) steady at 5.50% annually. This decision reflects a balance between positive domestic economic signals and international risks. The bank views the current rate as a "neutral position," neither stimulating nor tightening the economy, but rather maintaining equilibrium.

The monetary authority framed the rate level as consistent with a “neutral position” of monetary policy, meaning a configuration that neither seeks to further tighten nor stimulate the economy, but rather to sustain equilibrium in the face of price and activity evolution.

— Monetary Policy CommitteeExplaining the rationale behind maintaining the interest rate.

Paraguay's economy is showing favorable dynamism, with projections for 4.2% expansion in 2026, following a 6% growth in 2025. Inflationary pressures are primarily linked to volatile components like fuels and some food items, particularly vegetables. Monthly inflation in May was 0.1%, with an annual rate of 2.4%. The bank anticipates inflation will remain below its target in the coming months.

the Paraguayan economy continues to show dynamism that it considers favorable.

— Monetary Policy CommitteeDescribing the domestic economic outlook.

While acknowledging upward pressure on fuel prices for 2026, the CPM noted that this has been partially offset by lower pressures in other goods. This suggests the fuel price shock has not led to a widespread price increase, supporting the continuation of neutral monetary policy. Externally, a significant decrease in oil prices since the last meeting could alleviate energy and fuel costs, a key factor for inflation. Nevertheless, geopolitical uncertainties in the Middle East remain a concern.

a significant decrease in oil prices

— Monetary Policy CommitteeNoting external factors influencing inflation.
DistantNews Editorial

Originally published by ABC Color in Spanish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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