(Bloomberg) — Paraguay’s central bank raised its benchmark interest rate to a seven-year high on Tuesday in a bid to rein in the highest inflation in more than a decade.
Monetary policymakers raised the key rate by 50 basis points to 6.25% after a 25 basis point hike in February. Inflation is expected to creep up to the 4% target, so board members will be told in a male/female communication.
Latin American central banks were already struggling to contain above-target consumer price increases before Russia’s invasion of Ukraine sent additional inflationary shocks to the world economy. Paraguay, which imported all its fuel, saw inflation accelerate to 9.3%, from 7.9% in January.
Fuels and some foods such as fruits and vegetables accounted for almost 70% of the inflationary pressures in those months.
Expectations of slower growth this year due to drought could limit inflationary pressures in the economy, the central bank said.
Paraguay raises key rate to 6.25% as inflation accelerates
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