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Guatemala Monetary Policy February 2021

Guatemala: Central Bank keeps rate unchanged in February

The Monetary Board of the Central Bank of Guatemala stood pat at its 17 February meeting, leaving the monetary policy rate unchanged at the all-time low of 1.75% and marking the fourth consecutive hold.

In deliberating the decision, the Bank noted that inflation is expected to land within the 3.0%–5.0% tolerance band this year. At the same time, the Bank pointed out that high frequency data continued to highlight recovering activity. As such, further action on the monetary policy front was not warranted.

The Bank’s tone was largely unchanged from the prior meeting in the accompanying press release. It gave no explicit forward guidance in terms of future rate movements, but stated that it will continue to closely monitor developments that may affect prices. Looking ahead, some panelists expect the Bank to somewhat tighten its monetary policy stance this year as the economic recovery gains further traction and stokes inflation. However, a notable output gap due to last year’s hit to GDP is likely to limit any upward pressure on prices.

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