According to Antonieta de Bonilla, chairperson of the Monetary Board, the measure seeks to reduce the cost of bank credit.
Lorena Alvarez in her article in Elperiodico.com.gt, published statements by the chairperson: "The leading rate was reduced by 0.50 base points because inflation expectations have been reduced and it is anticipated to end this year at 5%."
The Monetary Board believes that there are now conditions, limited and temporary, to reduce the monetary policy leading interest rate.
A statement from the Bank of Guatemala reads:
MONETARY BOARD REDUCES LEAD POLICY RATE BY 50 BASIS POINTS
The Monetary Board, at its meeting today decided to reduce the level of the leading interest rate for monetary policy by 50 base points from 5.50% to 5.00%, based on comprehensive analysis of the foreign and domestic situation, after reviewing the Inflation Risks Balance, and the results of the mechanical shift of semi-structural Macroeconomic Model for June and orientation of the indicative variables of monetary policy.
Guatemala's Monetary Committee has raised the benchmark interest rate half a percentage point, from 6.75 to 7.25 percent.
It made the decision upon learning that the rate of inflation soared to 13.56 percent in June, well above the Central Bank's goal of 4 to 7 percent.
"The interest rate was at a level that we thought was low, and we don't want abrupt changes," said Central Bank President María Antonieta del Cid de Bonilla.
The Monetary Board has maintained the leading interest rate for monetary policy at 5.5%.
At its meeting held on February 15th , 2012, the Monetary Board decided unanimously to maintain the level of the monetary policy leading interest rate at 5.50%, based on a comprehensive analysis of economic and financial events, internally and externally, after having been informed about the Inflation Risks Balance, as well as the results of the first implementation in 2012 of the semi-structural Macroeconomic Model and the orientation of the indicative variables of monetary policy, according to a press release by Banguat.
Taking into account stable macro economic variables at the national and the global level, the Bank of Guatemala has decided not to change the policy leader rate, the main reference for interest rates in the country.
From a statement issued by the Bank of Guatemala (BANGUAT):
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