(Bloomberg) -- Paraguay’s central bank held its benchmark interest rate unchanged for a second straight month at 6%, saying that borrowing costs are around their neutral level.

The economy grew as expected during the first quarter and international risks, especially oil prices, have receded since April’s policy meeting, the central bank said. 

The path of interest rates going forward will be guided by domestic and international developments, policymakers said in a post-meeting statement.

Latent inflationary risks have clouded the outlook for further easing by some inflation targeting central banks in Latin America. Paraguay, Uruguay and Mexico held rates steady this month, while Chile slowed the pace of rate cuts at its most recent policy meeting.

Economists surveyed by Paraguay’s central bank expect the key rate will stay at 6% through June, with policymakers cutting by 50 basis points in the second half of the year.

Paraguay’s consumer prices accelerated for a third consecutive month to 4% in April, from 3.6% the previous month. The central bank targets 4% inflation with a tolerance of plus or minus 2 percentage points.

The central bank attributed the recent rise in inflation to volatile prices whose inflationary effects may recede later in the year.

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