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Guatemala Monetary Policy April 2023

Guatemala: Banguat continues with slow and steady approach, hiking by 25 basis points in April

On 26 April, the Monetary Board of the Central Bank of Guatemala (Banguat) raised the key policy rate by 25 basis points to 5.00%. With the latest hike, the cumulative increase in the policy rate amounts to 325 basis points since April 2022.

The decision was explained by headline inflation reaching 8.7% in March, above the Bank’s 3.0–5.0% target range. In addition, 12-month market inflation expectations were also above the target range. As such, the Bank hiked in order to tame price pressures. The Bank’s decision to hike by 25 basis points rather than by a larger increment was likely due to the desire to reduce inflation without significantly affecting economic growth.

Similar to previous releases, the Bank did not provide hints regarding forward guidance, simply affirming its commitment to tame inflation and anchor expectations. The Consensus is for a lower policy rate by the end of the year, although forecasts are likely to be revised up going forward in light of the Bank’s latest move.

The next monetary policy meeting is scheduled for 31 May.

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