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Guatemala Monetary Policy August 2023

Guatemala: Guatemala’s Central Bank holds steady amidst declining inflation

On 30 August, the Monetary Board of the Central Bank of Guatemala (Banguat) kept the key policy rate unchanged at 5.00%, marking the third consecutive hold.

The choice to halt the tightening of monetary policy was influenced by the recent decline in inflation, which has remained within the 3.0–5.0% target band of the Bank for two months. Banguat attributed recent drops in inflation to the delayed impact of prior monetary tightening measures, reduced price pressures coming from external factors and a decrease in inflation expectations. The Bank believes that inflation will continue to hover within its designated range throughout 2023 and 2024.

In line with its past communiqués, the Bank refrained from offering any indications about forward guidance, reiterating its commitment to curbing inflation and stabilizing inflation expectations. The majority of our panelists expect the Bank to lower its policy rate by the end of the year.

The next monetary policy meeting is scheduled for 27 September.

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