In November 2025, Paraguay’s Central Bank maintained its policy rate at 6.00%, unchanged from October 2025 and consistent with the 12-month average. This steady stance comes amid a backdrop of moderate inflation, stable GDP growth, and ongoing external uncertainties. The decision aligns with the Central Bank’s objective to balance inflation control with support for economic activity.

Drivers this month

• Inflation remained contained at 3.8% YoY in November, slightly below the 4.0% target ceiling.
• GDP growth for Q3 2025 was revised upward to 3.2% YoY, reflecting resilience in agriculture and manufacturing.
• External demand softened due to slower growth in key trading partners, notably Brazil and Argentina.

Policy pulse

The 6.00% rate holds steady after a prolonged period of stability since April 2025, signaling the Central Bank’s confidence in current monetary conditions. The rate remains above the regional average of 5.5%, reflecting Paraguay’s inflation dynamics and currency considerations.

Market lens

Following the announcement, the PYGUSD currency pair showed a mild appreciation of 0.15%, while short-term government bond yields remained flat. Market sentiment suggests confidence in the Central Bank’s measured approach amid global volatility.

Core macroeconomic indicators for November 2025 reinforce the Central Bank’s decision to maintain rates. Inflation held steady at 3.8% YoY, a slight deceleration from October’s 4.0%. This marks a continuation of the downward trend from the 4.3% peak in August 2025. Meanwhile, industrial production rose 1.5% MoM in November, supported by strong agricultural exports.

Monetary Policy & Financial Conditions

Monetary aggregates showed moderate growth, with M2 expanding 4.2% YoY in November, consistent with stable credit conditions. Lending rates for businesses averaged 8.5%, unchanged from October, while consumer credit growth slowed to 2.1% MoM, reflecting cautious household spending.

Fiscal Policy & Government Budget

Fiscal accounts remain under pressure, with the government running a 3.5% of GDP deficit in November, slightly wider than October’s 3.3%. Public debt stands at 38% of GDP, manageable but trending upward due to increased infrastructure spending. The government’s fiscal stance remains expansionary but prudent.

External Shocks & Geopolitical Risks

Regional geopolitical tensions, particularly in neighboring Argentina, have introduced volatility in trade flows. Commodity price fluctuations, especially in soy and beef, have moderated export revenues. The Central Bank’s cautious approach reflects these external uncertainties.

Drivers this month

• Inflation easing contributed 0.15 percentage points to the decision to hold rates.
• Moderate GDP growth of 3.2% YoY reinforced the need for policy stability.
• External risks from regional trade disruptions added caution.

Policy pulse

The Central Bank’s neutral stance reflects confidence that inflation will remain within the 3-4% target band without further tightening. The policy rate remains accommodative relative to inflation-adjusted real rates, supporting ongoing recovery.

Market lens

Immediate reaction: PYGUSD appreciated 0.15% post-announcement, signaling market approval of the steady policy. Sovereign bond yields held steady, while equity markets showed mild gains, reflecting reduced uncertainty.

Looking ahead, Paraguay’s monetary policy faces a mix of upside and downside risks. Inflation is expected to remain near target, but external shocks and fiscal pressures could alter the trajectory.

Bullish scenario (30% probability)

• Global commodity prices rebound, boosting exports and fiscal revenues.
• Inflation continues to ease below 3.5%, allowing for gradual rate cuts in H1 2026.
• Regional stability improves, supporting trade and investment.

Base scenario (50% probability)

• Inflation remains stable around 3.8-4.0%, with steady GDP growth near 3%.
• Monetary policy remains on hold through early 2026, balancing inflation and growth.
• Fiscal deficits persist but remain manageable.

Bearish scenario (20% probability)

• External shocks worsen, with commodity prices falling and trade disruptions intensifying.
• Inflation spikes above 5%, forcing the Central Bank to hike rates.
• Fiscal pressures escalate, undermining market confidence.

Paraguay’s Central Bank decision to hold rates steady at 6.00% in November 2025 reflects a prudent balance amid stable inflation and moderate growth. The policy stance supports ongoing recovery while remaining vigilant to external and fiscal risks. Market reactions suggest confidence, but the evolving geopolitical and commodity landscape warrants close monitoring.

Continued data from the Sigmanomics database will be critical to track inflation trends, credit conditions, and fiscal developments as Paraguay navigates the complex macroeconomic environment heading into 2026.