By Daniela Desantis

ASUNCION (Reuters – Paraguay will finish 2022 with an inflation rate close to 6%. The country’s chief central banker said this Monday. It is just below the limit of the tolerance range of the entity as it fights rapidly rising energy prices and the fast-rising price of grain.

The South American country’s central bank president, José Cantero, added in an interview that the benchmark interest rate should end the year at a similar level to the current 6.25%.

A sharp rise has been seen in the prices of consumer goods in the country due to the rise in global fuel and food costs, which was made worse by the Russian invasion. Inflation in February, year on year was 9.3%. It is also the highest inflation rate in the past 11 years.

Cantero stated that “We’re seeing levels tending towards 6% by end of year” and that the target of 4% will be attained by middle of next year.

Cantero stated that the bank will revise down its economic growth projection for the year to 3.7% in April and also lower last year’s official figure, which was 5% due to drought’s impact on soybean production.

His statement was that, “Given drought’s impact on 2021/2022 campaigns, we expect 2021 growth to be lower than 5%. At the same time we project 2022 to grow at the same rate… The revision will be downward.”

Paraguay’s high prices and rapid inflation have forced its central bank to increase interest rates. In the eight most recent monetary policy meeting, the benchmark rate was pushed up by 550 basis points.