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Guatemala Monetary Policy April 2020

Guatemala: Banguat stands pat at its 29 April meeting

The Monetary Board of the Bank of Guatemala (Banguat) held its fire at its 29 April meeting, keeping the key interest rate at an all-time low of 2.00%. This followed two consecutive rate cuts in March of a combined 75 basis points.

The Bank’s decision was based on its belief that the previous rate cuts and the government’s fiscal stimulus would partly compensate the drop in aggregate demand due to the global Covid-19 pandemic. Moreover, while price pressures are forecast to be muted this year, the Bank expects inflation to accelerate next year.

In its press release, the Bank reaffirmed it is closely monitoring domestic and external developments and their effect on price stability. While the Bank did not explicitly mention the future direction of monetary policy, additional rate cuts should not be ruled out as the longevity and severity of the health crisis and its economic fallout remain uncertain.

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