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Paraguay raises its key rate to a maximum of seven years to 6.25%

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(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.

original note:

Paraguay raises key rate to 6.25% as inflation accelerates

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