Monday, June 22, 2020

Paraguay cuts rate 5th time as inflation heading lower

    Paraguay's central bank lowered its monetary policy rate for the fifth time this year, saying it considers a more accommodative policy appropriate to support a gradual recovery of domestic demand and ensure inflation converges to its target of 4.0 percent.
    The Central Bank of Paraguay (BCP) cut its policy rate by another 50 basis points to 0.75 percent and has now cut it by 325 points this year following three cuts in March and one in April.
    BCP added the decision by its monetary policy committee was unanimous.
    Internationally, data show a greater than expected negative impact on activity from the quarantine imposed to curb the spread of the Covid-19 virus and the forecast for the regional economy is also showing reduced growth, BCP said.
    The domestic economy showed a "significant drop" in April and a smaller contraction in May while inflation, both headline and underlying measures, remain on a downward trajectory, the central bank said.
     Weaker domestic demand and the prospect of further economic deterioration of the economy of Paraguay's trading partners indicate limited inflationary pressures in coming months, it added.
     Paraguay's headline inflation rate fell to 0.7 percent in May from 2.0 percent in April.


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