The Monetary Policy Committee (CPM) of the Central Bank of Paraguay (BCP) unanimously decided to keep the monetary policy rate (TPM) at 5.50% per year for the fourth consecutive month. The decision was announced this Friday and reflects a neutral monetary policy stance in light of robust economic indicators in the country.
Domestically, the Monthly Indicator of Economic Activity of Paraguay (Imaep) recorded year-on-year growth of 8.2% in March, driven by the services, manufacturing, and primary sectors. The Business Figures Estimator (ECN) also showed an expansion of 9.2% in the same period, supported by increased sales of fuels, vehicles, construction materials, and chemical-pharmaceutical products. The accumulated variations of the Imaep and the ECN were 4.7% and 4.9%, respectively.
Inflation, as measured by the Consumer Price Index (CPI), closed April with a monthly variation of 0.8%, mainly driven by higher fuel prices. In year-on-year terms, total inflation stood at 2.3%, below the official target of 3.5%. The technical committee estimates that year-on-year inflation will remain temporarily below the target, converging to the goal in the second half of this year.
The external scenario, however, remains marked by strong uncertainty. Brent crude oil prices showed volatility due to geopolitical tensions in the Middle East, reaching around US$103 per barrel. In the United States, year-on-year inflation rose to 3.8% in April, fueling expectations that the Federal Reserve (Fed) may raise its interest rates early next year.
The CPM stated that it will continue to closely monitor external risks to assess their impacts on the inflation trajectory and adopt necessary measures to ensure convergence to the target.