Informe de política monetaria. Junio 2012

Abstract

The Central Bank of Paraguay (BCP), by legal mandate, is the country's economic authority responsible for designing monetary policy. According to Law No. 489/95, the BCP's fundamental objectives are to preserve and ensure the stability of the currency's value and promote the effectiveness and stability of the financial system. The BCP implements monetary policy on two fronts to meet its assigned objectives: 1) controlling the interest rate, or the cost of money, from a short-term perspective; and 2) controlling the supply or availability of money, from a medium-term perspective. This strategic direction aims to influence the performance of a set of intermediate variables that influence the trajectory of inflation, which in turn can serve as a framework for achieving stable long-term economic growth. The BCP's monetary policy has traditionally focused on controlling monetary aggregates, especially the most liquid type known as MO (Banknotes and Coins in Circulation), whose growth trajectory is established annually in the monetary program approved by the BCP's Board of Directors.