Guatemala: Banguat reduces rates in November
Easing cycle continues at last 2025 meeting: On 26 November, the Bank of Guatemala (Banguat) reduced its policy interest rate by a further 25 basis points to 3.75%—the lowest since December 2022—mirroring both September and August’s decisions.
Muted inflation makes room for more cuts: Banguat deemed it had room to cut rates for a third consecutive meeting as available data suggested that economic growth remains on track this year and next, in line with market expectations, and inflation remained below the 3.0–5.0% target. The cut therefore aims to anchor inflation expectations and support the inflation rate’s convergence toward the midpoint of the target range ahead.
Further reductions expected next year: In the absence of forward guidance regarding future decisions, our panelists expect Banguat to resume rate cuts next year, ending 2026 25–50 basis points below current levels. As the Central Bank seeks to minimize the interest rate differential with the U.S., it may wait until after Fed meetings before further easing. Lower-than-expected economic growth in Guatemala, linked to evolving U.S. trade and immigration policy, is a downside risk.