The Monetary Board of the Bank of Guatemala unanimously held the monetary policy rate at 3.50%, judging that upside inflation risks from persistently high fuel prices and a possible El Niño remained contained while inflation forecasts and expectations stayed within target for 2026 and 2027. Over the past year, it made three 25-basis-point cuts, from 4.25% to 4.00% in September 2025, to 3.75% in November and to 3.50% in February 2026. Headline inflation rose to 3.37% in August from 2.70% in July, remaining within the 4.0% plus or minus 1 percentage point target, primarily reflecting higher international fuel prices and some food price increases. Most short-term activity indicators remained consistent with projected 2026 gross domestic product growth of 3.3%-5.3%, although a prolonged global crude-oil supply shock could affect domestic fuel prices and the economic outlook. Global growth prospects remained positive, supported by resilient consumption, manufacturing and services expansion, artificial intelligence-related technology investment and recovering trade, but uncertainty and downside risks persisted because of the Middle East conflict and energy-market developments. The Monetary Board reiterated that it will monitor domestic and external indicators closely and take necessary measures to keep inflation within target.

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