Considering the main internal and external variables stable, the Bank of Guatemala is keeping the leading policy rate, a major reference for interest rates in the country, unchanged.
The Monetary Board in its meeting today decided to keep the level of the monetary policy leading interest rate at 5.25%, based on comprehensive analysis of the external and internal situation, after finding out about the Balance Inflation Risks.
Taking into account inflation expectations, the Monetary Board has increased the leading interest rate by 0.25% , going from 5% to 5.25%.
From a press release issued by the Bank of Guatemala (Banguat):
The Monetary Board in its meeting today, after learning the balance of inflation risks, based on comprehensive analysis of the external and internal situation, has decided to raise the level of the monetary policy leading interest rate by 25 base points, going from 5.00% to 5.25%.
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 .
In order to keep inflation in check, the central bank raised the rate to 4.75%.
The improvement experienced by the economy and escalating raw material prices are some of the reasons which has led the Central Bank of Guatemala (Banguat) to raise its interest rate, which controls the growth of prices in the country.
Central America may be directly impacted by the slowdown in the recovery of the world economy.
For the time being, the region's measures of external and internal demand do not seem affected by the threat of lower growth rates for the economies of partner developed countries.
The Monetary Board decided not to modify the Leader Rate, which currently stands at 4.5%.
For this decision, the board pondered that most global growth projections point to an economic recovery.
"If this scenario comes to reality, and considering the recent behavior of commodity prices, it would be less necessary to continue with our previous monetary policy measures", stated the Board.
The Central Bank approved a reduction of 0.25 basis points in the leader rate, setting it in 4.5%.
The Private Enterprise was looking for a reduction of 0.50 basis points, arguing there is no inflationary pressures right now.
María Antonieta de Bonilla, President of the Central Bank of Guatemala (Banguat), commented that the reduction of the rate "... is in response to an observed reduction in inflation, and a decreasing trend in consumer prices projections, forecasts and expectations".
Since yesterday financial groups offering loans will be required to have reserves that equal 100% of the expired credits portfolio.
According to prensalibre.com, "In order to achieve this, generic reserves have been established to support current (specific) requests.
Banks should have reserves representing a percentage based on the last accrued months of portfolio, which range from 5% for a 30-day accrual and up to three month, and 100% for more than a year."
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?
Tomorrow the Superintendence of Banks (SIB) will request that the Monetary Board approve a modification of the Regulations for Credit Risk Management.
Even though bank portfolios in arrears are not at a critical level, the SIB will request that the Monetary Board make the changes to the rules in order for banks to increase their reserves for bad debts (loans).
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.
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