MercoPress. South Atlantic News Agency

Paraguay's Central Bank lowers interest rates once again

The latest Gross Domestic Product (GDP) and employment growth data “were better than expected,” according to a BCP statement

Paraguay's Central Bank (BCP) Monday lowered once again the monetary policy interest rate from 6.50% to 6.25% per annum. It was the seventh straight move in the same direction since August last year, it was reported in Asunción.

The decision was adopted Monday at the Monetary Policy Committee after ascertaining the resilience of the economy in the light of the latest Gross Domestic Product (GDP) and employment growth data, which “were better than expected,” according to a BCP statement.

The BCP also noted that the expectation of the first interest rate cut “was postponed to the second quarter of this year and in financial markets there was a slight increase in long-term bond yields and the international strengthening of the dollar.” It also took into consideration persisting tensions in the Middle East, which has “affected container transportation costs in certain maritime routes” in addition to an increase in international oil prices.

Locally, the BCP analyzed the growth of the Paraguayan Monthly Economic Activity Indicator (IMAEP) and the Paraguayan Business Figures Estimator (ECN). It also pointed out that inflation expectations “have remained in line with the 4% target” in 2024, despite the increase in January, when the Consumer Price Index (CPI) was 0.9 %, mainly due to “the higher prices of beef and volatile items.”

In August last year, the BCP ordered a reduction in rates to 8.25 % and since then has been announcing cuts until reaching 6.50 % per annum last January.