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Guatemala Monetary Policy March 2024

Guatemala: Banguat holds key policy rate at 5.00% in March

On 20 March, the Monetary Board of the Central Bank of Guatemala (Banguat) unanimously decided to keep the key policy rate at 5.00%, marking the seventh consecutive hold.

Price pressures cooled further through February, which the Bank attributed to still-tight monetary policy and slowing imported price pressures: Inflation decreased to a two-year low of 3.3% in February, inching closer to the floor of the Bank’s target range of 3.0–5.0%. Regarding activity, Banguat noted short-term indicators at the outset of 2024 align with its forecast of 2.5–4.5% growth for the year. Against this backdrop, the Bank decided to maintain its currently restrictive monetary policy stance, which it assessed will firmly anchor 2024 inflation expectations within the target range.

In its communiqué, Banguat did not include explicit forward guidance. That said, the Bank underlined that it stands ready to take further necessary action to anchor inflation within its target range. Given the current disinflationary environment, our Consensus is for the Bank to embark on an easing cycle, with around 150 basis points of cuts by end-2024.

The next monetary policy meeting is scheduled for 24 April.

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