Paraguay continues rate hikes despite economic contraction

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Paraguay’s central bank raised its policy rate by 50 basis points on June 21, in its 11th consecutive increase since last August.

The benchmark rate now stands at 7.75%, 700bp above the low it reached in the Covid-19 pandemic. The central bank’s monetary policy committee (MPC) took the decision to raise rates despite a recent sharp contraction in Paraguay’s growth rate.

The MPC has moderated its tightening policy in recent months, after three 125bp hikes in the last months of 2021. In 2022

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