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Bloomberg
Paraguay’s central bank surprised economists by delivering its biggest interest rate increase in a decade as rising prices for food and imported fuel push inflation well above target.
The central bank’s board unanimously voted to tighten by 125 basis points to push its key rate to 2.75%. The decision followed a 50 basis-point hike last month and a 25 basis-point increase at the start of its tightening cycle in August.
Policy makers expect “to continue the adjustment cycle with a tenor similar to the current decision in the context of the November and December†monthly rate setting meetings, the central bank said in a statement.
Paraguay’s rate increase is one of the biggest in Latin America where many central banks are tightening monetary policy to keep rising
inflation from eroding purchasing power and undermining currencies. The central bank flagged the risks of commodities-driven inflation affecting the prices of other goods and services.