- Decision
- Maintain
- Rate change
- 0 bps
- policy interest rate
- 4.5%
The Monetary Board of the Bank of Guatemala kept its policy leading interest rate unchanged at 4.50 % at its 28 May meeting, judging that while domestic activity “maintains its momentum”, inflation remained below the 3 % lower bound of the 4 % ± 1 pp target in April thanks to lower fuel and food prices and is projected to stay around the lower bound in 2025 and dip below the midpoint in 2026; external growth prospects, however, face rising downside risks from intensified trade and geopolitical tensions. The rate has now been held at 4.50 % since at least March 2025. No changes were announced to the operating framework. Internationally, oil prices have continued to decline to levels below those at end-2024 amid expectations of higher global supply, and although global inflation is easing it remains above several central banks’ targets. The Board reiterated its readiness to act to keep inflation within the target range and signalled that, should current conditions persist, it could consider adopting a more accommodative stance at its next meeting.
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.