Market players expect inflation to close at 4.0% in both 2023 and 2024. This emerges from the results of the Economic Variables Expectations (EVE) survey for September presented this Friday by the Central Bank of Paraguay.
In this way, economic actors adjusted their estimates of inflation at the end of the year from 4.1% to 4.0%. What is expected is lower than the parent bank’s forecast for this year, which is 4.1%. It is important to note that the inflation target is 4.0% in the medium term.
For this month, the median monthly inflation expectations are 0.1%, lower than in the same month last year (0.4%) and this month
August 2023, i.e. 0.3%. For the tenth month, intermediaries calculate monthly inflation of 0.2%.
Regarding the evolution of the nominal exchange rate between Guaraní and dollar, BCP agents expect for the month of September a level of G. 7,285, slightly lower than what was reported in the previous month for this month 7,290. For the month of October this year, the exchange rate is expected to be 7,300 G. per dollar.
Likewise, economic actors expect an exchange rate of G7,300 by the end of 2023 and G7,350 next year.
Regarding average economic growth expectations, respondents expect GDP growth of 4.5% by 2023 and 4% by 2024.
Monetary Policy Rate (MPR)
As for the monetary policy rate (MPR), economic agents expect it to be 8.00% this month and 7.75% in October 2023.
That is, respondents expect that the parent bank will cut its benchmark interest rate by 25 basis points in September, as it did in August, after keeping it at 8.50% for eleven consecutive months.
They expect an MPR of 7.38% by the end of 2023 and an MPR of 6.00% by the end of 2024.
Miguel Mora, chief economist of the BCP, explained that the rate of 7.38% for the end of this year was due to a methodological problem and that there was no real deviation from the 7.25% reported last month by the representatives of the MPR were estimated for the end of the year.
“As the months go by, the number of people responding to the surveys fluctuates because we take into account the median response, in this case ordered from lowest to highest, and when we have the number of even responses represent the means we report “The two central numbers add up to a number of 7.38, so to speak in real terms, which would not represent an increase in their expectations of the monetary policy rate for the period,” he explained.