Paraguay’s Central Bank Chief Enjoys ‘Nice Problem’ of Low Inflation

Carlos Carvallo faces a challenge most central bankers would envy. Inflation is a touch too low in Paraguay and the monetary authority’s chairman is starting to cut rates in an effort to boost prices.

Surrounded by volatile currencies, landlocked Paraguay stands out for its stability. Annual inflation slowed to 2.7% in January, below the central bank’s 3.5% target for second straight month. It’s a sunny contrast to 32% price hikes in neighboring Argentina, but also lower than much of Latin America, including Brazil, Mexico and Colombia. Even in safe-haven Uruguay, inflation is higher.