Friday, February 22, 2019

Paraguay cuts rate 25 bps, data determines next move

     Paraguay's central bank lowered its policy rate by 25 basis points to 5.0 percent, saying it considers it "appropriate and timely" to adopt a more accommodating monetary policy more to ensure that inflation converges to its 4.0 percent target.
     It is the Central Bank of Paraguay's (BCP) first rate cut since August 2017 and the second since May 2016 when it began an easing cycle.
     BCP said the size and pace of further easing would depend on domestic and international data.
     The bank's monetary policy committee, which was unanimous in its decision, emphasized the lowered expectations for global economic growth due to continued international uncertainty, including trade tensions between the U.S. and China, Brexit discussions, and the more conservative position of the Federal Reserve regarding its monetary policy normalization.
      On a regional level, Brazil is showing some signs of recovery while the prospects for Argentina remain weak and domestic economic activity is showing a more moderate expansion.
      Inflation has continued on a downward trajectory but inflation expectations remain well anchored, BCP said.


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