Macroeconomic Forecast Paraguay

BMI View: Consumer price inflation declined by 0.8% m-o-m in October, bringing the y-o-y increase for the same month down to 6.2% from 9.4% in September. Much of the October decline in consumer prices is attributable to the recent shutdown of Paraguay's meat export market in the wake of the foot-and-mouth disease outbreak that hit the country in September. Given the temporary nature of this shock and the central bank's decision in its November meeting to cut the 14-day reference interest rate by 50bp to 8.0%, we are happy to stick to our end-2011 Paraguayan inflation forecast of 8.0%.

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