Paraguay

Paraguay’s central bank cut its benchmark interest rate Monday for the seventh time since August as inflation remains below 4% after a post-pandemic surge, Bloomberg News reported. The monetary authority lowered its key rate to 6.25% from 6.5%, continuing an easing cycle that began after borrowing costs peaked at 8.5%, according to a statement published Monday. Consumer prices increases, once in double-digit territory after the pandemic, have consistently cooled with the latest data showing annual inflation at 3.4% in January.

Paraguay will end 2021 with inflation of 6.8%, well above the official target and the highest rate since 2010, driven by food and fuel price increases, the central bank said on Thursday, Reuters reported. Last year consumer prices in the country rose 2.2% and the official goal for 2021 was to end the year with a 4% rise. In 2010, inflation was 7.2%. Fuels soared almost 30%, beef 18% and flour 16% in 2021, according to a report from the bank, which did not register increases in consumer prices during the month of December.

Paraguay will continue to dial back pandemic stimulus next year as a fast growing economy cushions austerity measures that have proved unpopular in other South American countries, Bloomberg News reported. The government has already reduced temporary pandemic cash transfers to people working in the country’s vast informal sector without triggering social unrest, Finance Minister Oscar Llamosas said in an interview. “The task of adjusting fiscal accounts was largely done this year, and the idea is to continue that in next year’s budget,” Llamosas said.