- Decision
- Maintain
- Rate change
- 0 bps
- policy interest rate
- 4.5%
The Monetary Board of the Bank of Guatemala left the leading policy interest rate unchanged at 4.50 percent on 30 April, citing inflation that remains well below target and a moderation in both domestic and global growth prospects alongside still-elevated external inflation risks. The policy rate has been steady at 4.50 percent since at least March 2025. Annual headline inflation eased to 1.57 percent in March, below the 3–5 percent target range, and is projected to return to the 4 percent midpoint in 2025-26 even after the Board cut its 2025 GDP growth forecast to 3.8 percent from 4.0 percent while keeping the 2026 outlook at 3.9 percent. Globally, the International Monetary Fund has trimmed its growth projections amid rising trade tensions, oil prices have fallen below end-2024 levels on supply expectations and demand uncertainty, and inflation abroad remains above targets with upside risks. The Board reiterated its readiness to act if needed and will keep close watch on domestic and external indicators to ensure inflation stays within the target band.
Rate evolution
From May 2025 to September 2026, Bank of Guatemala's Monetary Board cut the policy rate by 100 basis points to 3.50%, after holding at 4.50% through June, delivering three straight 25 basis-point reductions from August to November, and cutting by a further 25 basis points in February before holding from March through June, and in August and September. The initial holds came even though inflation was below the lower bound of the 4.0% +/- 1 percentage point target because domestic activity remained dynamic and external uncertainty was high, but as fuel prices fell, food supply shocks faded and inflation forecasts shifted lower, the Board eased to anchor inflation expectations and guide inflation toward the medium-term target midpoint.
At its 18 February 2026 decision, the Monetary Board said the global outlook remained positive despite trade and geopolitical risks and attributed below-bound January inflation to favorable food supply shocks and lower fuel prices, then held the policy rate at 3.50% from March through June as domestic activity matched projected 2026 growth of 3.1% to 5.1% and inflation forecasts and expectations pointed to inflation within target in 2026 and 2027.
On 26 August, the Board unanimously held the policy rate at 3.50%, noting that short-term activity indicators were consistent with 2026 growth of 3.3% to 5.3%, while inflation rose to 2.70% in July from 2.27% in June following the end of the fuel subsidy and amid imported inflation pressures. On 23 September, it again unanimously held the rate at 3.50%, with global growth prospects remaining positive despite high uncertainty, most short-term domestic indicators still consistent with that growth estimate, and inflation rising to 3.37% in August, below the 4.0% target midpoint. The increase mainly reflected higher international fuel prices, alongside emerging increases in some food prices, but forecasts and expectations continued to indicate inflation within target in 2026 and 2027, and the Board judged upside risks from persistently high fuel prices and possible El Niño effects to be contained for the moment.