Introduction to Paraguay’s Economic Update
The Central Bank of Paraguay made a significant decision during its December meeting, choosing to leave its policy interest rate unchanged at 6%. This decision reflects the bank’s assessment of both global and domestic economic factors.
Global Economic Trends
The committee considered various global developments, including the Federal Reserve’s decision to cut its target range to 3.50%–3.75% in December. Markets are anticipating further cuts in 2026, indicating a potential shift in global monetary policy. Additionally, the US employment rate in November exceeded expectations, despite a slight increase in unemployment to 4.6%. The annual inflation rate in the US eased to 2.7%, suggesting a moderate inflationary environment.
International Market Trends
Internationally, oil prices continued to decline due to global oversupply. However, agricultural prices were mixed, with corn prices rising while soybean and wheat prices fell. These fluctuations in commodity prices can have significant impacts on the global economy, particularly for countries reliant on these commodities.
Domestic Economic Performance
In Paraguay, the economy demonstrated steady growth, with the Monthly Economic Activity Indicator increasing by 5.7% year on year in October 2025. This growth was supported by various sectors, including services, manufacturing, agriculture, and electricity and water. The diverse contribution to economic growth suggests a robust and resilient economy.
Inflation and Price Stability
Inflation in Paraguay remained low, with the monthly Consumer Price Index (CPI) at 0.2% in November and an annual inflation rate of 4.1%. Furthermore, inflation expectations for the next 12 months held steady at 3.7%. The Central Bank of Paraguay reaffirmed its commitment to maintaining price stability, which is crucial for sustaining economic growth and controlling inflation.
Conclusion
The Central Bank of Paraguay’s decision to maintain its policy interest rate at 6% reflects its careful consideration of both global economic trends and domestic economic performance. With steady economic growth, low inflation, and a commitment to price stability, Paraguay’s economic outlook appears positive. The bank’s decision aims to support continued economic growth while keeping inflation in check, ensuring a stable economic environment for the future.
