Guatemala Q1 2017 Report
Monetary Intervention Plus Monetary Expansion Equals Risk
With the aim of stimulating and maintaining the economy “competitive,” the Bank of Guatemala has increased the monetary base at a faster rate without any response from the economic agents, since growth in monetary aggregates continues to be low and decelerating. This is not the only hopeless intervention, as the Bank of Guatemala also decided to intervene to counter the alleged excess supply of dollars, evidenced by the “outrageous” appreciation of the quetzal. This high level of intervention and the scant response from the broader economy are beginning to signal a deterioration of the integrity of the economy.
