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.
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.
The Central Bank of the Dominican Republic lowered the monetary policy rate from 5.5% to 5%, arguing that the inflationary rhythm was below the lower limit of the target range for the seventh consecutive month.
The decision to reduce 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.
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%.
After the Central Bank of Costa Rica reduced the Monetary Policy Rate for the second time this year, it is estimated that the effects on the economy will be delayed.
On May 22, the Central Bank of Costa Rica (BCCR) decided to reduce the Monetary Policy Rate from 5% to 4.75%, arguing that the increase in international commodity prices and the redefinition of the basic tax basket could put upward pressure on inflation.
Arguing that core inflation remains below total inflation, the BCH decided to maintain the Monetary Policy Rate at the same level.
From the BCH statement:
May 9th, 2019. In ordinary session No.164 held on May 6, 2019, the Open Market Operations Commission (COMA) of the Central Bank of Honduras (BCH) analyzed the current situation and prospects of the main macroeconomic and financial indicators, at the national and international levels.
Arguing that the medium-term forecasts indicate that the inflation trajectory will remain above the tolerance range, the BCH decided to raise the Monetary Policy Rate by 0.25%.
From the BCH press release:
January 4th, 2019. In ordinary session No.158-10-12/2018, the Open Market Operations Commission (COMA) of the Central Bank of Honduras (BCH), analyzed the recent evolution and perspectives for the main macroeconomic and financial indicators, at domestic and international levels.