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Guatemala Monetary Policy February 2020

Guatemala: Banguat stands pat in February

At its 19 February meeting, the Monetary Board of the Bank of Guatemala (Banguat) kept the key interest rate unchanged at 2.75%, where it has now been for over two years.

Well-anchored inflation expectations led the decision to stand pat, as the Bank sees inflation in the 3.0%–5.0% target range this year despite temporarily falling below the range in January. Moreover, the Bank highlighted that recent economic data points to growth consistent with its 3.1%–4.1% 2020 growth forecast. On the external front, the Monetary Board stated that economic growth this year and the next should be higher than last year. However, this view could prove optimistic, given the Bank made no mention of the recent outbreak of the coronavirus, which will weigh on global trade levels, manufacturing and consumption.

The Bank reaffirmed its commitment to closely monitor key economic indicators and the effects on prices and inflation expectations. Going forward, some panelists expect the Bank to raise rates amid robust economic growth and on-target inflation, while others see the Bank on hold.

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