Paraguay central bank targets 3.5% inflation rate by mid-2026

Investing.com -- Paraguay's central bank is aiming to slow price increases to its new 3.5% inflation target by mid-2026, according to Chairman Carlos Carvallo. The current benchmark interest rate stands at 6%. Carvallo confirmed that adjustments to the rate, such as hikes or easements, are not off the table if they are necessary to achieve the new inflation target.

The monetary authority's current estimate for price increases in the upcoming year is 3.7%, slightly higher than this year's rate. Carvallo expressed confidence in the current monetary policy rate, stating that it is at a level that should guide inflation towards the central bank's new aim.

Despite Carvallo's stance, some analysts predict changes in the near future. A survey conducted by the central bank earlier this month revealed that analysts expect the board members to reduce rates by half a percentage point to 5.5% in the coming year.

Under Carvallo's leadership, borrowing costs have remained steady since April. Inflation has been recorded for 20 consecutive months, staying within a narrow range around the previous target of 4%.

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Source: Investing.com