Guatemala's high interest rates create uncertai

Several sectors of Guatemala's economy are making dire predictions about the negative effects of the Central Bank's decision to raise its benchmark interest rates as part of its anti-inflation strategy.

Friday, July 25, 2008

Among the expected effects are corresponding increases in bank loan rates, less investment, more unemployment, and exchange appreciation, all of which spell more problems for the economy.
The Monetary Committee of the Central Bank increased its seven-day leading rate by half a percentage point this week to 7.25 percent.
The president of the Central Bank, María Antonieta de Bonilla, said the approved increase is gradual and she does not expect abrupt changes in bank interest rates. However, business is expecting higher credit costs and many companies and consumers are putting investment and consumption plans on hold for the moment.

More on this topic

Guatemala Maintains 5% Monetary Policy Rate

March 2013

The Monetary Board, at its meeting on March 19, decided to keep the level of its monetary policy leader interest rate at 5.00%.

From a press release by the Bank of Guatemala (Banguat):

The Monetary Board in its meeting held today, decided to maintain at the level of 5% the leader monetary policy interest rate, based on comprehensive analysis of the external and internal situation, after having seen the Balance Inflation Risks .

Costa Rica: Basic Rate Down to 7.25%

December 2010

Maintaining its recent trend of high volatility, the base rate fell 50 basis points to 7.25%.

In the most recent inflation report, Banco Central de Costa Rica (BCCR) reveals one of the causes of this behavior which generates distortions to individuals and financial instruments that are linked to the national reference rate.

Main interest rate remains unchanged in Guatemala

December 2008

The monetary board decided yesterday to keep the main interest rate at 7.25%, despite the request from the business sector to lower it in order to revive the economy.

How many houses are not being built and how many business projects have been stopped due to the lack of credit or the increase in interest rates? And, how many potential jobs have been lost as a result?

Guatemala's interest rates rise; benchmark rate now is 7.25%

July 2008

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.

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