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Guatemala Monetary Policy November 2020

Guatemala: Central Bank keeps rate unchanged in November

The Monetary Board of the Central Bank of Guatemala stood pat at its 25 November meeting, leaving the monetary policy rate unchanged at the all-time low of 1.75% and marking the third consecutive hold.

The decision to hold fire was driven by well-anchored inflation expectations, with the Bank stating that inflation should remain on target this year and next. Moreover, the Bank noted that the economy was continuing to recover, therefore further easing was not warranted.

The Monetary Board struck a largely unchanged tone from its prior meeting in the press release, giving no explicit forward guidance on future rate movement. The Board reaffirmed it will continue to monitor the evolution of data and its effect on prices. Looking ahead, panelists expect the Bank to somewhat tighten its monetary policy stance next year as the economic recovery gains further traction and stokes inflation. However, a notable output gap due to this year’s hit to GDP is likely to limit any upward pressure on prices.

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