Macroeconomic Forecast Guatemala

While inflation fell to 7.25%y-o-y in September from 7.63%y-o-y in August, it remains above the Central Bank's target of 4.00-6.00%. The fact that inflation remains significantly above the Central Bank's target band despite the softening of imported inflationary price pressure as commodity prices have fallen, is supportive of our view that the Central Bank will be unable to cut its policy rate in the short term, keeping Guatemala's current 5.00% initial rate steady through the end of 2011.

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