Setting a maximum usury rate and preventing clients from getting into debt to the extent of reducing their income below the minimum wage line are some of the changes that have arisen due to the application of the new law that has been in force since June 20.
On June 20, 2020 the Usury Law was published in the scope number 150 to La Gaceta number 147, which establishes the methodology to be used to set the maximum interest rate, from which the crime of usury will be considered to exist, details an official statement.
As part of the health emergency generated by the spread of covid-19, the Bank of Guatemala decided to reduce the prime interest rate again, from 2.25% to 2%.
The Monetary Board considered that, in the last few days, the perspectives of world economic growth for 2020 have deteriorated considerably, due to the persistent propagation of the coronavirus, which has increased the volatility and uncertainty at a global level, informed the Bank of Guatemala.
Arguing that the impact of covid-19 will be significant in the context of global and local economic slowdown, the Central Bank decided to lower the leading interest rate of monetary policy by 50 basis points, from 2.75% to 2.25%.
The decrease in the leading interest rate of the monetary policy seeks to help contain the deceleration of the economic activity and employment in the short term and reduce the cost of credit, informed the Banco de Guatemala.
For the Central Bank of Costa Rica, the constant reductions in the Monetary Policy Rate that have taken place since March 2019 have been gradually and incompletely transferred to the interest rates of the financial system.
Arguing that the main economic indicators show a stable behavior, the Central Bank decided at the beginning of the year to maintain the level of the leading interest rate of the monetary policy at 2.75%.
From the Bank of Guatemala's statement:
February 20th, 2020. The Monetary Board, in its session celebrated on February 19, based on the integral analysis of the external and internal economic situation, after evaluating the Inflation Risks Balance, decided to keep the level of the leading interest rate of the monetary policy at 2.75%.
Arguing that the inflationary expectations of the economic agents are still close to the upper limit of the tolerance range with a decreasing tendency, the Central Bank of Honduras decided to keep the monetary policy rate at the same level.
From the BCH statement:
Tegucigalpa MDC, November 13, 2019. In the ordinary session No.169/11-11-2019 held on November 11, 2019, the Open Market Operations Commission (COMA) of the Central Bank of Honduras (BCH) analyzed the current economic conditions and the most recent perspectives internally and externally. In the international environment, the growing commercial and geopolitical tensions have aggravated the uncertainty, generating a deceleration in the commercial flows and lower perspectives of world economic growth for 2019 and 2020.4
After the Central Bank of the Dominican Republic decided at the end of August to lower the monetary policy rate to 4.5%, on October 31 it decided to keep it unchanged, arguing that inflation continues in the projected ranges.
From the Central Bank of the Dominican Republic:
Santo Domingo, October 31, 2019. In its October 2019 monetary policy meeting, the Central Bank of the Dominican Republic (BCRD) decided to maintain its monetary policy interest rate at 4.50% annually.
Arguing that the reduction would support the incipient economic recovery process shown by production indicators, the Central Bank decided to lower the Monetary Policy Rate for the sixth time this year.
The central banks of some advanced and emerging economies have relaxed their interest rates, which expands the space for a countercyclical monetary policy in Costa Rica, according to the Central Bank's analysis.
After the Central Bank of the Dominican Republic decided at the end of August to lower the monetary policy rate to 4.5%, on September 30 it decided to keep it unchanged, arguing that inflation has remained in the projected ranges.
From the Central Bank statement:
Santo Domingo, September 30, 2019. In its monetary policy meeting of September 2019, the Central Bank of the Dominican Republic (BCRD) decided to maintain its monetary policy interest rate at 4.50% annually.
After the Central Bank of the Dominican Republic decided at the end of July to lower the monetary policy rate to 4.75%, on August 30 it decided to reduce it again, in this case to 4.5%.
The decision on the reference rate is based on market expectations and medium-term projections. Monthly inflation in July was 0.47%, while cumulative inflation in the first seven months of the year stood at 1.64%, according to the monetary authority.
Between January and July of this year in Costa Rica the Central Bank lowered the Monetary Policy Rate four times in a row, but its last decision was to maintain it at 4%.
Among the arguments of the monetary authority it is worth highlighting that the international interest rates are adjusted downward. In particular, the US Federal Reserve System reduced the reference interest rate range by 25 base points.
After the Central Bank of the Dominican Republic decided at the end of June to lower the monetary policy rate to 5%, on July 30 it announced another reductin, in this case to 4.75%.
The decision on the reference rate is based on the detailed analysis of the risk balance regarding the inflation forecasts, including international and domestic macroeconomic indicators, market expectations and medium term projections, informed the Central Bank.
Arguing that there are deflationary pressures and that the unemployment rate remains high, the Central Bank reduced the Monetary Policy Rate from 4.5% to 4%.
This would be the fourth reduction in the Monetary Policy Rate made by the Central Bank of Costa Rica (BCCR) so far this year, since at the beginning of 2019 was at 5.25% and is currently reduced to 4%.
Arguing that deflationary forces persist and that a low rate of economic activity is reported, the Central Bank decided to reduce the Monetary Policy Rate to 4.50%.
This is the third reduction made by the Central Bank of Costa Rica (BCCR) so far this year, since at the end of March it decided to reduce the monetary policy rate from 5.25% to 5% and in May from 5% to 4.75%.
For the third time, in this year, the Banco de Guatemala confirmed that it decided to keep the monetary policy rate at 2.75%, since the short term indicators of the economic activity show a dynamism that adjusts to the expected.
From the Banco de Guatemala press release:
Guatemala, May 30, 2019. The Monetary Board, in its session held on May 29, based on the integral analysis of the external and internal economic situation, after evaluating the Inflation Risks Balance, decided to keep the level of the leading interest rate of the monetary policy at 2.75%.