The Monetary Policy Committee (CPM) of the Central Bank of Paraguay (BCP) unanimously decided to keep the monetary policy interest rate at 5.50% per year, in line with what is considered a neutral stance — neither providing additional stimulus nor tightening policy. The decision was announced after the committee's most recent meeting.
The monetary authority assessed that the Paraguayan economy continues to show favorable momentum, with a growth projection of 4.2% for 2026, following a 6% expansion in 2025. Monthly inflation in May came in at 0.1%, and the twelve-month cumulative rate stood at 2.4%, below the target set by the BCP.
The committee noted that the inflationary pressures observed throughout 2026 are concentrated in volatile components, particularly fuels and some food items such as vegetables. The rise in fuel prices exceeded initial projections for the year, but the impact has been partially offset by lower pressures on other basket items, preventing a generalized increase in prices.
On the external front, the CPM recorded a significant drop in oil prices since its last meeting, which could ease energy and fuel costs. However, the geopolitical situation in the Middle East remains a source of uncertainty: despite recent diplomatic progress, the committee warned that a further deterioration of the situation could reignite pressures on commodities and domestic prices.
Another factor being monitored is the market expectation that the U.S. Federal Reserve will raise interest rates in the coming months, a move with the potential to affect global financial conditions, capital flows, and the cost of financing. Given this backdrop, the BCP opted to leave the rate unchanged and stated that it will continue to closely monitor external risks in order to adopt the measures necessary to bring inflation back to the target.