PARAGUAY · CENTRAL BANK
Key Facts
- The country Paraguay is a landlocked South American country of about 7 million people and one of the world’s largest exporters of soybeans and beef.
- What happened On Friday 23 October 2026 the central bank’s monetary policy committee voted unanimously to keep its benchmark rate at 5.50% a year, unchanged since February.
- Inflation Prices rose 0.1% in September and 1.7% over twelve months, while core inflation, which strips out food and energy, stood at 1.5%.
- The guaraní The guaraní stood at about 5,742 to the US dollar on 23 October 2026.
- Growth The central bank raised its 2026 growth forecast from 4.5% to 5%, after August activity rose 6.7% from a year earlier.
- The catch The bank warns that oil above US$110 a barrel and higher US interest rates are the main risks to its inflation outlook.
- Power Index Paraguay ranks 10th of 14 in The Rio Times Latin America Power Index, with 36.0 points (October 2026 edition).
The Paraguay policy rate stays at 5.50%, after the central bank voted unanimously on Friday 23 October 2026 to leave it alone. That rate sets the tone for loans and savings across the country.
For US readers the Paraguay policy rate matters because it shows a US trading partner holding steady while US inflation climbs again. Paraguay sells soybeans and beef to world markets, and its borrowing costs matter to investors in its companies and debt.
What the Central Bank Decided
The Banco Central del Paraguay, known as the BCP, is the country’s central bank, and its monetary policy committee meets once a month. The bank’s statement says the committee held the Paraguay policy rate at 5.50% and called it neutral, meaning it neither boosts nor slows the economy.
The rate has stood at 5.50% since February 2026, after cuts from 6.00% to 5.75% in January and to 5.50% a month later. That makes the October vote the latest in a long run of holds.
Inflation Is Well Below the Target
Consumer prices rose 0.1% in September from August, pushed up by food, fuel and services and held back by cheaper durable goods. Over twelve months inflation reached 1.7%, which is only about half of the bank’s 3.5% target, as the Rio Times reported on 2 October.
Core inflation, which leaves out food and energy prices, was 1.5%. The bank now expects 2026 to end at 3.0%, down from its earlier forecast of 3.3%, and its core forecast fell from 2.8% to 2.2%.
A Stronger Economy Than Expected
Activity in August grew 6.7% from a year earlier, led by electricity, manufacturing and services. The bank then lifted its 2026 growth forecast from 4.5% to 5%, a change the Rio Times covered on 16 October.
Paraguay’s electricity comes mostly from large hydroelectric dams, which is why power output counts for so much in the data. Growth that is strong while inflation is low gives the bank room to wait rather than act.
Oil and US Rates Are the Worry
The committee pointed to Middle East tensions that have kept Brent crude, the world oil benchmark, above US$110 a barrel. Paraguay imports all its fuel, so dearer oil can lift prices at the pump and then ripple through transport and food.
The bank also noted that US inflation rose from 3.4% to 3.7%. Markets now expect the US Federal Reserve to raise rates further, and the dollar gained 1.4% in a month.
What the Guaraní Rate Means in Dollars
At about 5,742 guaraníes (about US$1.00) on 23 October 2026, a loan of 100 million guaraníes is worth about US$17,400. A cheaper dollar would lower the cost of imported fuel, while a stronger one raises it.
Because the Paraguay policy rate stayed at 5.50%, the bank is not using its rate to push the currency either way. It called the stance neutral and pointed to oil and US rates as the risks it is watching.
What It Means for US Readers
US investors in Paraguayan bonds and local companies get a stable backdrop of low inflation and fast growth. A steady Paraguay policy rate means no sudden jump in funding costs for firms that borrow in guaraníes.
US exporters, travellers and lenders should watch the guaraní and oil prices, which the bank names as risks. The decision does not change any tariff, visa or trade rule between the two countries.
What Is Not Known
The central bank has not said whether it expects to cut or raise the Paraguay policy rate at its next meeting. It describes 5.50% as neutral but gives no date for any change.
The size of any oil-driven price rise is also unclear, as is the path of US interest rates through 2027. Neither is something the Paraguayan committee controls.
More: Paraguay news in English, every day from The Rio Times.
Frequently Asked Questions
What is the Paraguay policy rate now?
The Paraguay policy rate is 5.50% a year after the committee’s unanimous vote on Friday 23 October 2026. It was also 5.50% after the July, August and September meetings.
Why did the central bank not cut the rate?
The bank calls 5.50% a neutral setting and worries about oil above US$110 a barrel and higher US interest rates. With inflation expectations at 3.5%, it saw no reason to move.
How high is inflation in Paraguay?
Prices rose 1.7% over the twelve months to September 2026, below the bank’s 3.5% target. Core inflation, which excludes food and energy, was 1.5%.
How fast is the Paraguayan economy growing?
Economic activity grew 6.7% in August from a year earlier, and the bank now expects 5% growth for 2026. Its earlier forecast was 4.5%.
How many guaraníes are in a US dollar?
The rate was about 5,742 guaraníes (about US$1.00) on 23 October 2026. That makes 1 million guaraníes worth about US$174.
Sources: Revista PLUS, BCP mantiene la tasa de política monetaria en 5,50%, 23 October 2026; Revista PLUS, BCP eleva a 5% proyección de crecimiento y reduce inflación al 3% para 2026, 16 October 2026; La Nación, créditos tomarán impulso tras recorte de la tasa de política monetaria, 26 January 2026; La Nación, BCP mantiene invariable la Tasa de Política Monetaria en 5,50 %, 22 September 2026.
Editorial responsibility: Matthias Camenzind, Editor-in-Chief · Editorial standards · Report an error