RIO DE JANEIRO, BRAZIL – Paraguay’s Central Bank raised its benchmark rate to 7.75% as rising food and energy prices keep inflation in double digits.
Monetary policymakers raised the rate by half a percentage point for the fourth consecutive month, warning that recent increases in fuel prices will put pressure on consumer prices in June and July.
Inflation is expected to slow from the third quarter, converging to the 4% target in the first quarter of 2024, the central bank said in a statement.
Latin American countries have raised borrowing costs to protect their economies from global inflationary pressures exacerbated by Russia’s invasion of Ukraine.
Paraguay’s interest rates remain profoundly negative, with inflation rising 11.4% in May.
Still, consumer prices slowed in April from a 14-year high of 11.8%.
The central bank affirmed its year-end inflation forecast of 8.2%, decelerating to 4.2% by the end of 2023.