Guatemala: Central Bank keeps rates on hold in August
Banguat stands pat for a fifth straight meeting: On 26 August, the Bank of Guatemala (Banguat) kept its policy rate at 3.50%, the lowest since November 2022. The pause was the fifth in a row after the Bank cut rates by 100 basis points between August 2025 and February 2026.
Resilient economic growth and below-target inflation prompt another hold: Banguat opted against a cut as economic momentum remained resilient in H1. Tightening was also unnecessary: Inflation climbed to 2.7% in July from June’s 2.3%, but remained below the Bank’s 3.0–5.0% target band, with the increase reflecting imported cost pressures and the expiry of a fuel subsidy rather than a broad-based overheating of the economy. The Bank continues to expect inflation to move inside target in 2027 and views upside risks from global fuel prices and the El Niño weather event as contained for now.
Policy rate seen steady through year-end: While the Bank provided no guidance on the path of upcoming decisions, most of our panelists expect it to leave rates unchanged through the end of 2026, though a minority still projects it to cut. Since the Bank is likely seeking to preserve its interest rate differential with the U.S., it may wait for the Federal Reserve’s next meeting before moving again. Most of our panelists expect U.S. rates to remain unchanged by the end of the year.
Banguat is scheduled to meet again on 23 September.