The central bank decided to lower in 0.5 basis points the leader interest rate, going from 5.25% to 4.75%.
'Some of the reasons for this decision are lower observed growth in inflation and lower inflation expectations' explained María Antonieta del Cid de Bonilla, Central Bank President.
Even though the reference interest rate has dropped 2.25 points so far in 2009, the average interest rate of a loan at a bank has increased 0.67 points.
Even though the reference interest rate ("tasa líder"), has dropped 1.75 percentage points so far this year, the rate for an average loan increased 0.67 points.
In January this year, the average interest rate for loans was 15.06%, raising to 15.73% by the end of June, according to data from the Banking Superintendence.
Journalist Jenniffer Marroquín writes in an Elperiodico.com.gt article: "On the other hand, the reference rate for monetary policy [known as 'tasa líder'], was 7.0% in January, but after several adjustements it dropped to 5.25%. The central bank will review this rate once again".
Junta Monetaria (the Monetary Board) decided to lower the leader rate of the monetary system by 0.50 basic points, dropping from 5.75% to 5.25%.
The reductions in the leader rate that the Junta Monetaria has been implementing since January 2009, a month in which the indicator was at 7.25%, still does not reflect the interest rates that the banks are charging.
The Monetary Board reduced the monetary policy's leading rate by 0.5 base points, from 6.25% to 5.75%.
According to Antonieta de Bonilla, chairperson of the Monetary Board, the measure seeks to reduce the cost of bank credit.
Lorena Alvarez in her article in Elperiodico.com.gt, published statements by the chairperson: "The leading rate was reduced by 0.50 base points because inflation expectations have been reduced and it is anticipated to end this year at 5%."
The Monetary Board (JM) decreased the leading interest rate by 0.25 basis points, placing the indicator at 6.25%.
According to Sigloxxi.com, "One of the reasons for the adjustment, said the chairman of the Board and the Bank of Guatemala (Banguat), Maria Antonieta de Bonilla, is that inflation over the past three months was lower than expected. Even so, it lies slightly above the tolerance margin for 2009.
Starting today, the prime interest rate based on monetary policies dropped from 7 to 6.5%.
Lorena Álvarez writes in Elperiodico.com.gt: “It is the second monthly reduction in the rate approved by the monetary board. At the January meeting, a reduction of 0.25 points was approved. Experts from the central bank have conducted forecasts indicating that the inflation rate might close at 6.8 percent in 2009 and be at 4 percent by the end of 2010."
Official sources indicated that government representatives will suggest a reduction of the official prime rate by up to 1 point.
Elperiodico, on its website, publishes: "The Monetary Meeting (JM, initials in Spanish) will analyze a possible reduction of the prime interest rate tomorrow in order to try to revive credit and the economy. In its meeting of January, [action by] the JM reduced the prime rate by 0.25 points, leaving it at 7 percent, a reduction considered timid by bankers and analysts."
The Monetary Board reduced the prime interest rate by .025 percentage points.
Prensalibre.com reports: "The decision was due, among other things, to the drop in the oil and food prices, as well as the forecast of recession in the world's largest economies, according to explanations at a press conference yesterday afternoon by the president of the Bank of Guatemala, Maria Antonieta Del Cid de Bonilla."
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?
Businessmen estimate that a reduction in the rate which is now at 7.25% would help to reactivate credit.
There are division and the debate is hot. The petition from the industrial sector to lower the main interest rate in order to reactivate the economy has its supporters and dissidents.
Representatives from the private sector believe that it is time to make an adjustment.
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.
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.
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.
Guatemala's Monteary Committe kept the leading seven-day interest rate at 6.75 percent. the rate is one of the government's tools to control prices.
Maria Antonieta Del Cid de Bonilla, present of the Bank of Guatemala (Banguat) and of the Monteray Committee, said during a press conference that the decision was made unanimously.
The Banguat has taken liquidity out of the market and by so doing it has reduced the monetary issues with the goal of preventing a major increase in prices.