Paraguay Holds Policy Rate at 5.50%

Paraguay’s central bank kept its policy rate unchanged at 5.50% at its September 2026 meeting. The bank noted that economic activity continues to perform favorably, in line with its projected 4.5% growth for 2026. Annual inflation remains low, mainly due to the behavior of goods prices, which increased 0.4%, particularly non-energy goods. Meanwhile, inflation in services and rents remains around 3.5%. Inflation is projected at 3.3% by year-end, converging toward the target over the monetary policy horizon. Inflation expectations remain aligned with the target. The external environment remains subject to risks, including developments in international petroleum product prices and uncertainty related to the conflict in the Middle East, particularly its potential implications for supply conditions and energy prices. In addition, market expectations point to another increase in the federal funds rate over the remainder of the year.

Paraguay’s central bank kept its policy rate unchanged at 5.50% at its August 2026 meeting, the decision reflected favorable domestic activity and subdued inflation. Economic activity rose 5.6% year-on-year in June, in line with the central bank’s 4.5% growth forecast for 2026, while business sales increased 4.1%. Annual inflation eased to 1.6% in July from a year earlier, with core inflation at 1.3%, while 12-month inflation expectations remained anchored at 3.5%. The central bank expects inflation to gradually rise to 3.3% by December and converge to 3.5% over the policy horizon. Externally, uncertainty remained elevated amid geopolitical tensions, high oil prices and expectations of a higher-for-longer Fed rate path. The next policy meeting is scheduled for September 21st.

Paraguay's central bank kept its benchmark interest rate unchanged at 5.5% in July 2026. Policymakers noted that domestic economic activity continues to outperform expectations, prompting an upward revision to the country's 2026 GDP growth forecast to 4.5% from 4.2%, supported by stronger prospects for agriculture, manufacturing, utilities, and services. At the same time, the inflation forecast for 2026 was lowered to 3.3% from 3.5%, reflecting softer price pressures for non-energy goods. Headline inflation eased to 2.1% in June, while core inflation remained at 1.1%, with inflation expectations anchored at 3.5%. Despite the favorable domestic outlook, the central bank highlighted rising external risks, including higher oil prices driven by Middle East tensions and expectations of further Federal Reserve rate hikes.