Guatemala: Prime Rate Drops to 2.25%

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%.

Monday, March 23, 2020

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.

See "Coronavirus: How Will It Affect Business?"

From the Bank of Guatemala's press release:

March 19th, 2020. The Monetary Board, in an extraordinary session held today, unanimously, in coordination with the actions being taken by the Executive Branch, in order to mitigate the threats and adverse economic effects faced by the country as a result of the worldwide spread of COVID-19 and its presence in the national territory, decided to implement extraordinary monetary and credit policy measures.

For this purpose, this body based on the analysis of the external and internal economic situation, strongly impacted by the COVID-19, and before the deceleration foreseen in the growth of the world and national economy, decided to reduce the prime interest rate of the monetary policy by 50 basic points, from 2.75% to 2.25%, with which it seeks to help contain the deceleration of the economic activity and employment in the short term and reduce the cost of credit.

Additionally, the Monetary Board, at the proposal of the Superintendence of Banks, decided to temporarily relax several provisions contained in the Regulation for Credit Risk Management, in order to mitigate the effects that the COVID19 could cause in the debtors of the banking system that are affected by the emergency, so that they can comply with their credit obligations.

As a complement to the mentioned dispositions, the Banco de Guatemala keeps the credit facilities it offers for the supply of liquidity, as well as those that it offers in its role as lender of last instance to the banking system.

The Monetary Board estimates that these dispositions will help mitigate the impact on homes and businesses. Also, reaffirms its commitment to continue giving close follow up to the evolution of the world economic and financial situation and its implications in the national economy so that, if necessary, it adopts the additional measures that correspond.

Coronavirus: How do the outlook for businesses in Guatemala change?

We prepared for our clients the report "Information System: Impact Analysis of Covid-19 on Business" that answers these and other questions in times of uncertainty.



More on this topic

Honduras: Lending Rate Goes Down 4.5%

April 2020

In recent weeks, the country's financial system has seen a considerable drop in the lending rate on new loan operations, which is partly explained by the reduction in the Monetary Policy Rate.

According to reports from the Central Bank of Honduras (BCH), between March 9 and April 10, 2020, the rate fell from 14.81% to 10.31%. This fall is being recorded in the context of the health crisis caused by the outbreak of covid-19.

Pandemic: Dominican Republic and its Monetary Policy

March 2020

Raising the amount of liquidity facilities for financial intermediaries by $909 million and reducing the legal reserve ratio in local currency by 0.5% are some of the measures taken by the Central Bank in response to the spread of covid-19.

Regarding the exchange market, the Central Bank was authorized to offer liquidity in dollars for $622.4 million, of which $400.0 million will be granted through Repos up to 90 days and the remaining $222.4 million will be released from legal reserve resources in foreign currency, informed the institution.

Guatemala: New Reduction in Prime Rate

March 2020

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.

Dominican Republic: Monetary Policy Rate Falls to 3.5%

March 2020

Given the significant increase in global uncertainty associated with the economic impact of the coronavirus, the Central Bank decided to reduce the monetary policy rate from 4.5% to 3.5%.

In addition, a series of measures were adopted to provide liquidity, both in national and foreign currency, with the objective of making available to financial institutions a large amount of resources so that they can effectively meet the demand for credit from the productive sectors and Dominican households, reported the Central Bank.

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