- Decision
- Maintain
- Rate change
- 0 bps
- policy interest rate
- 3.5%
The Monetary Board of the Bank of Guatemala unanimously held the monetary policy rate at 3.50%, saying the decision reflected inflation that remains within target and a still-positive domestic growth outlook despite higher external uncertainty and imported price pressures. The Board said short-term domestic indicators remained positive, consistent with its 2026 growth estimate of 3.1% to 5.1%, although a longer-lasting external supply shock in domestic fuel and energy prices could affect Guatemala’s economic outlook this year. Headline inflation rose to 3.24% in April 2026 from 2.50% in March but stayed within the Board’s 4.0% plus or minus 1 percentage point target, and the Board said inflation forecasts and expectations still point to inflation remaining on target in 2026 and 2027, even as risks are tilted upward by uncertainty over the Middle East conflict and the possibility that El Niño could affect domestic weather conditions. Globally, the Board said world growth prospects remain positive, supported by resilient private consumption and still-favorable international financial conditions, but noted greater uncertainty and downside risks as the prolonged geopolitical conflict in the Middle East has constrained Persian Gulf energy supply and driven sharp increases in international oil prices, with effects already appearing in global inflation. The Board said it will continue to closely monitor external and domestic indicators and take the measures needed to keep inflation within target.
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.