By CentralBankNews.info
Paraguay’s central bank left its monetary policy rate steady at 4.0 percent for the second time in a row, saying the current accommodative policy stance is “for the time being” compatible with inflation hitting the target and future monetary policy decisions will continue to based on the evolution of domestic and external data.
The Central Bank of Paraguay (BCP), which left its rate steady in October after five rate cuts from February to September by a total of 125 basis points, added data for local economic activity and consumption show signs of recovery but there is still a high level of uncertainty surrounding trade talks and Brexit, who’ll could affect the expected economic recovery in 2020.
Inflation is still in the lower end of the target range, BCP added.
Paraguay’s economy has been hit hard by several shocks this year, including drought and then flooding that affected agricultural output, along with economic weakness in Argentina and Brazil, which affected exports.
Earlier this month the International Monetary Fund said it expected growth in Paraguay this year of close to zero but this should bounce back to 4 percent next year, supported by agriculture.
Paraguay’s inflation rate fell to 2.4 percent in October, the lowest this year, from 2.6 percent in September, below the bank’s mid-target of 4.0 percent, plus/minus 2 percentage points.
Gross domestic product shrank 3 percent year-on-year in the second quarter of this year, larger than the 2.1 percent decline in the first quarter.
