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

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