Wednesday, November 25, 2020

Guatemala maintains rate as economy seen recovering

     Guatemala's central bank left its monetary policy rate steady for the third time, saying the country's economy is recovering better than it had expected in the middle of this year and inflation is forecast to remain around the target this year and in 2021.
     The Bank of Guatemala left its leading interest rate at 1.75 percent after cutting it three times earlier this year by a total of 100 basis points following two rate cuts in March and one in June. 
     At its previous meeting in September, the bank's monetary board also unanimously maintained the rate.
     Guatemala's economy contracted by an annual 9.6 percent in the second quarter after expanding 0.9 percent in the first quarter and the central bank said most short-term indicators, such as family remittances, the monthly index of economic activity, confidence, and monetary aggregates, show a better recovery than expected in the middle of this year.
     In June the central bank forecast the economy would contract between 3.5 and 1.5 percent this year, down from estimated growth in 2019 of 3.8 percent.
     Guatemala's inflation rate has accelerated in the last four months and rose to 4.97 percent in September from 4.19 percent in August.



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