Banguat keeps rates on hold in April

Banguat holds steady for a second straight meeting: On 29 April, the Bank of Guatemala (Banguat) left its policy rate unchanged at 3.50%, the lowest since November 2022. This extends the hold for a second consecutive meeting, following 100 basis points of cuts delivered through February 2026.

Iran war drives hold: Banguat refrained from cutting as the U.S.-Iran war has pushed international fuel prices sharply higher, adding a meaningful upside risk to imported inflation if the conflict drags on and warranting a cautious stance. At the same time, the Bank saw no case for a hike, as March inflation remained below the lower bound of its 3.0–5.0% target band and short-term economic activity indicators have stayed consistent in Q1 with the Bank's 2026 GDP growth forecast of 3.1–5.1%.

Easing expected to resume later this year: The Bank gave no forward guidance on future decisions. That said, our panelists still expect Banguat to resume easing rates in the remainder of 2026, with most seeing the policy rate finishing the year 25 basis points lower, one anticipating a steeper 50 basis point cut and another expecting no change. As the Central Bank seeks to limit the interest rate differential with the U.S., it may wait until after the Federal Reserve cuts rates before easing further. Persistently high energy prices due to the U.S.-Iran war pose upside risks to the policy rate, given Guatemala’s import dependency. Banguat will meet again on 27 May.

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