Colorful city in Guatemala

Guatemala Monetary Policy February 2022

Guatemala: Central Bank keeps rate unchanged in November amid well-anchored inflation expectations

At its meeting held on 16 February, the Monetary Board of the Central Bank of Guatemala (Banguat) held fire and maintained the monetary policy rate at 1.75%. This marked the eleventh consecutive decision to stand pat.

The decision was driven by well-anchored inflation expectations and high-frequency data pointing to a continued robust economic recovery. The Bank expects inflation to end the year within its 3.0%–5.0% target range.

The Bank reiterated that it would continue to closely monitor the evolution of the main economic indicators that affect the general price level and, thus, inflation expectations. Looking ahead, panelists expect Banguat to commence a tightening cycle this year to ensure inflation settles within the target range amid firming economic activity.

Analysts at the EIU added:

“Although the Banco de Guatemala (Banguat, the central bank) has been absorbing excess liquidity (a product of pandemic-related stimulus measures), we expect monetary policy to remain fairly accommodative until mid-2022. The central bank is likely to hold the rate at 1.75% in the short term to support the economic recovery, owing to anchored inflation expectations. The central bank is likely to raise the policy rate in keeping with the U.S. Federal Reserve (Fed, the U.S. central bank), which is expected to begin raising the Fed Funds rate in March. That said, the low level of financial intermediation in the country will limit their impact on the wider economy.”

The next meeting is set for 30 March.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest X Download Fullscreen