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Investing.com -- Paraguay’s central bank kept its benchmark interest rate steady at 6% on Friday, maintaining the level it has held since April 2024.
The Monetary Policy Committee unanimously decided to keep rates unchanged as inflation continues its gradual path toward the bank’s 3.5% target. Current inflation stands at 4.1% year-on-year, while core inflation excluding food and energy reached 2.3%.
The central bank projects inflation will be around 4.0% by the end of 2025 before converging to its 3.5% target during 2026. Inflation expectations remain anchored at 3.7% for the next twelve months and 3.5% for the monetary policy horizon.
Economic activity in Paraguay shows strong momentum, with the Monthly Indicator of Economic Activity growing 6.7% year-on-year, driven by services, manufacturing, agriculture, and other sectors. The Business Figures Estimator increased by 8.4% compared to the previous year.
Monthly inflation was -0.1% in October, primarily due to lower prices for fuels, imported durable goods, and vegetables, partially offset by increases in certain food items like beef and poultry.
The central bank noted that the strengthening of the local currency and declining international oil prices have contributed to reduced fuel prices locally and helped slow inflation in recent months.
Policymakers are also monitoring external factors, including the U.S. Federal Reserve’s recent rate cut and decreasing probability of another cut in December.
The next monetary policy meeting is scheduled for December 22, 2025.
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