- Decision
- Maintain
- Rate change
- 0 bps
- policy interest rate
- 3.5%
The Monetary Board of the Bank of Guatemala kept the monetary policy rate at 3.50%, citing inflation forecasts and expectations that remain within target in 2026 and 2027, even as it acknowledged upside risks from still-elevated fuel prices and the possibility that El Niño could affect domestic weather conditions. On the domestic side, the Board said short-term economic indicators remained positive despite high external uncertainty, consistent with its 2026 growth forecast of 3.1%-5.1%, while headline inflation slowed to 2.86% in May 2026 from 3.24% in April, below the Board’s 4.0% +/- 1 percentage point target, although it said recent inflation pressures reflected imported factors. The Board added that if no definitive peace agreement is reached, the external supply shock to domestic fuel and energy prices could persist and affect Guatemala’s economic outlook this year. Globally, it said growth prospects remained positive, supported by resilient private consumption and still-favorable international financial conditions, but noted greater uncertainty and downside risks linked mainly to the geopolitical conflict in the Middle East that has constrained energy supply from the Persian Gulf; at the same time, recent progress in negotiations to end hostilities has led to significant declines in international oil prices that could help moderate global inflation pressures. The Monetary Board reiterated that 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.