Tight money: bad remedy for inflation
No matter what the cause, the old remedy for rising inflation was restricting liquidity with the increase of interest rates and a virtual paralyzing of credit markets, says César A. Garcia in a column in the Guatemala newspaper Prensa Libre.
Tuesday, July 15, 2008
Garcia continues: The President of the Bank of Guatemala, Maria Antonieta de Bonilla, announced in an interview Monday that the Monetary Committee will stop the rise in prices, which create an impoverishing rate of inflation of 12 percent per year.
The Monetary Board reduced the prime interest rate by .025 percentage points.
Guatemala's Monetary Committee has raised the benchmark interest rate half a percentage point, from 6.75 to 7.25 percent.
The president of the Guatemala's Central Bank, María Antonieta de Bonilla, is worried about the current economic situation in hre country and predicts the coming of stricter credit conditions.
The president of the Bank of Guatemala has warned about the situation of the banks in country, which have exhausted their credit expansion capability.
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