Central Bank leaves rates unchanged in April

Central Bank holds rates again: On 30 April, the Monetary Board of the Central Bank of Guatemala (Banguat) held its key policy rate at 4.50%, a level it has remained at since November 2024.

Central Bank weighs trade uncertainty against low inflation: In justifying its decision, the Central Bank pointed out that inflation in March remained below its 3.0–5.0% target range for the seventh straight month. Still, Banguat opted against cutting rates, with trade uncertainty also influencing the decision; Trump’s tariffs have made the U.S. Federal Reserve more hawkish in its forward guidance, which could pressure the Guatemalan currency.

Easing cycle likely to resume this year: The Central Bank offered no explicit forward guidance, instead reiterating its commitment to maintain inflation within its target range. That said, our panelists expect the Central Bank to resume its cutting cycle this year, with forecasts ranging between 50–100 basis points of reductions by year-end. Upside risks to rates include tariff and anti-immigration plans in the U.S. forcing the Fed to extend its pause because of higher inflation, while downside risks include slower-than-expected growth in Guatemala. The Bank will reconvene on 28 May.

Panelist insight: EIU analysts weighed in: “We expect Banguat to resume rate cuts in the second half of the year and continue gradual easing, reaching a terminal level of 2.75% by early 2027. […] Guatemala's low level of financial intermediation reduces the influence of interest-rate pass-through, and changes in local and global financing conditions influence economic performance. Mr Trump's tariffs and anti-immigration plans could stoke inflationary pressures in the US and prompt the Fed to keep interest rates higher for longer there, limiting the scope for further monetary easing in Guatemala as well.”

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