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Guatemala Monetary Policy August 2020

Guatemala: Banguat stands pat in August

At its 26 August meeting, the Central Bank of Guatemala opted to keep the policy rate unchanged at the all-time low of 1.75%, after cutting it by 25 basis points at its previous meeting in June.

The decision to hold fire reflected the Bank’s assessment that the economy has passed the low point of the Covid-19 crisis, with short-term indicators hinting at a recovery of sorts. Consequently, the Bank expects inflation to accelerate next year.

In its press release, the Bank struck a largely unchanged tone from the prior meeting and gave no explicit forward guidance on future rate moves, although it reaffirmed that it would monitor the evolution of data and its effect on the price level. A recession this year and relatively subdued inflation could provide the Bank with the justification to further lower rates.

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