The Central Bank of Paraguay’s Monetary Policy Committee (CPM) unanimously cut the monetary policy rate (TPM) by 25 basis points to 5.75% from 6.00% on January 23, 2026, judging that inflationary pressures have moderated, inflation is expected to keep decelerating through most of 2026 and converge to the 3.5% target by year-end, and inflation expectations have consolidated around that target while monetary policy remains neutral; after holding the TPM at 6.00% from January through December 2025, the CPM eased in January 2026. December consumer price inflation was -0.3% month on month and 3.1% year on year, while CPI excluding food and energy rose 0.2% on the month and 2.3% on the year, and expectations for both the next 12 months and the monetary policy horizon stood at 3.5%. The CPM said economic activity kept positive momentum in the fourth quarter of 2025, consistent with a 6.0% growth estimate, and projected 2026 GDP growth at 4.2%, with November IMAEP up 4.0% year on year and the Large Companies Sales Indicator rising 6.3%. Externally, it cited resilient global activity amid heightened uncertainty, with the International Monetary Fund estimating 2025 growth at 3.3% globally and 2.4% in Latin America and the Caribbean, while oil prices rose on geopolitical tensions, soybean prices increased, the U.S. dollar index appreciated slightly and long-term U.S. Treasury yields rose. The CPM reiterated that it will closely monitor domestic and external developments and take timely
Central Bank of Paraguay cuts policy rate by 25 bps to 5.75%
The Central Bank of Paraguay’s Monetary Policy Committee unanimously cut the monetary policy rate by 25 basis points to 5.75% from 6.00% on 23 January 2026, its first easing after holding rates unchanged through 2025, citing moderating inflationary pressures and inflation expectations anchored at the 3.5% target. The committee expects inflation to continue decelerating through most of 2026 and converge to target by year-end, while projecting 2026 gross domestic product growth at 4.2% and reiterating that it will monitor domestic and external developments closely.