Paraguay's central bank lowered its policy rate for the fifth time this year, noting the downward risk in the growth prospects for the global economy, negative domestic growth and the absence of inflationary pressure.
The Central Bank of Paraguay (BCP) cut its policy rate by another 25 basis points to 4.0 percent and has now cut it by 125 basis points this year following cuts in February, March, July and August.
BCP said its monetary policy committee, CEOMA, was unanimous in its decision.
In South America the economic scenario remains complex, especially with regard to Argentina, and domestic economic activity and demand has improved marginally but cumulative growth rates remain negative.
Headline and underlying inflation also remain in the lower zone of BCP's target range and according to the bank's forecasts, there will not be any inflationary pressures in coming months.
"In this context, the Committee considers it appropriate to adopt an even more accommodative monetary policy profile that is compatible with the convergence of inflation to the annual 4.0% target in the forecast horizon," BCP said.
Paraguay's headline inflation rate declined to 2.8 percent in August from 3.1 percent in July while gross domestic product contracted by 2.0 percent year-on-year in the first quarter of this year after growth of 1.0 percent in the fourth quarter of last year.
BCP has forecast 2019 growth of 1.5 percent, down from 3.7 percent in 2018.
www.CentralBankNews.info
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