Paraguay's central bank cut its monetary policy rate by a further 25 basis points to 5.75 percent to provide additional monetary stimulus as growth forecasts for next year show that economic activity could drop below its potential.
The Central Bank of Paraguay, which has now cut its rate by 100 basis points this year, added that the decision by its Open Markets Operations Committee (CEOMA) was unanimous.
It added that inflation was under control and expectations remained anchored at 4.5 percent in the monetary policy horizon. The central bank targets inflation of 4.5 percent, plus/minus 2 percentage points.
While inflation is under control, the central bank said the global outlook continued to deteriorate rapidly, especially at the regional level, and activity in several sectors of Paraguay's economy had dropped in the past few months.
Paraguay's inflation rate eased to 2.5 percent in June from 3.3 percent while Gross Domestic Product in the first quarter expanded by 0.7 percent from the fourth quarter of last year for annual growth of 4.2 percent, down from 5.8 percent in the previous quarter.