The Monetary Policy Committee of the Central Bank of Paraguay (BCP) announced on Tuesday, April 21, 2026, its decision to maintain the benchmark interest rate at 5.5%. This move marks the second consecutive month that the central bank has kept borrowing costs unchanged, following a series of policy meetings where the committee evaluated the cooling of domestic price pressures. The decision was in line with the expectations of private sector analysts, many of whom have forecasted that the central bank will maintain this rate through the remainder of the year to ensure long-term price stability.
In its post-meeting statement, the BCP noted that the current inflation environment remains favorable despite external uncertainties. The central bank maintains a formal inflation target of 3.5%, with a flexibility band of two percentage points in either direction. According to the bank's latest figures, the annual inflation rate reached a five-and-a-half-year low of 1.9% in March. While this figure sits below the central target, the monetary authority expects a gradual convergence toward 3.5% as domestic demand remains resilient and the effects of previous monetary policy actions continue to filter through the economy.
A significant portion of the committee’s discussion focused on the impact of global energy markets. As Paraguay is a net importer of all its petroleum and refined fuel products, the recent uptick in international oil prices was a key consideration. However, the BCP clarified that it expects the impact of these energy price increases on the headline consumer price index to be limited. The bank emphasized that it will continue to monitor risks stemming from the external environment, specifically assessing how global supply chain shifts and commodity price volatility might influence the local inflation path.
Economic growth data also played a central role in the bank’s deliberations. High-frequency indicators monitored by the BCP show that the Paraguayan economy continued to expand throughout the first quarter of 2026. This follows a period of exceptional performance in 2025, when the nation’s Gross Domestic Product (GDP) grew by 6.6%, the highest rate recorded in twelve years. For the full year of 2026, the central bank expects growth to moderate to approximately 4.2%. This projected slowdown is characterized by policymakers as a transition toward a more sustainable pace of expansion.
The BCP concluded that the current monetary policy stance is consistent with the objective of maintaining price stability. The committee stated that it remains prepared to adopt necessary measures should external or internal shocks threaten the inflation target over the monetary policy horizon. By keeping the rate at 5.5%, the bank aims to balance the need for continued economic growth with the mandate of keeping inflation within its established limits. The next policy review is set for late May, providing the committee with another opportunity to assess the evolving economic landscape.