MercoPress. South Atlantic News Agency

Paraguay's Central Bank keeps benchmark interest rate unchanged at 6%

Cuts might be in order in the second semester of 2024, the BCP explained

The Monetary Policy Committee (MPC) of Paraguay's Central Bank (BCP) unanimously decided Thursday to keep the benchmark interest rate at 6% for the fourth month in a row and found that cuts might be in order during the second semester of 2024 given the favorable economic indexes recorded recently.

The Monthly Indicator of Economic Activity of Paraguay (IMAEP) was found to have risen by 7.8% year-on-year in April thanks to positive outcomes of services, manufacturing, construction, livestock, and agriculture.

At the same time, the Estimator of Business Figures (ECN) registered a year-on-year expansion of 15.2 %, driven by higher sales of fuels, household equipment, vehicles, and construction materials, among others.

A recent rebound in inflation was believed to stem from volatile prices expected to go down in the coming months. In May, the Consumer Price Index (CPI) stood at 0.4% for an interannual total of 4.4% due to increases in fruits and vegetables as well as in some durable goods.

The MPC also noted that risks have continued to dwindle last month on the international front as May's inflation in the US was below expectations. Global oil prices have risen slightly, while agricultural commodity prices have declined in the last month due to favorable supply prospects in light of improved weather conditions in the main producing regions.