He Bank of Mexico (Banxico) kept its interest rate at 11% on Thursday for the second time in a row before inflation jump over the past four months, so he considered a “restrictive” position necessary.
In its statement, in line with market expectations, the central bank “considered that challenges and risks” regarding inflation “deserve of continuing with inflation slowing.” prudent management of monetary policy“, given that “the expected path of inflation over the forecast horizon remains biased upwards.”
The decision, approved by four votes in favor and one against, was similar to the decision of May 9 and contrasted with the decision of March 21, when the Governing Council reduced interest rate by 25 basis points to 11%, the first decline since March 30, 2023, due to improved inflation expectations at that time.
On the other hand, it was in line US Federal Reserve System (Fed), which on June 12 kept the rate for the seventh time in the range from 5.25% to 5.5%.
Analysts had expected Banxico’s decision after it reported on Monday that headline inflation in Mexico rose to 4.78% in the first half of June, representing a steady rise since February.
“Expected that disinflationary process continue. Although the depreciation of the national currency has an upward impact on the inflation forecast, its consequences are partially offset by effects corresponding to greater weakness in economic activity,” the autonomous body clarified.
Board of Governors It maintained its forecast for average headline inflation at 4% for the final quarter of 2024.
And he also kept his expectations for inflation to average 3% through the end of 2025, the central bank’s target.
The central bank announced that “going forward, it expects that the inflation environment will allow for discussions on adjustments to the base rate.”
Even Deputy Governor Omar Mejia Castelazo voted to cut the rate by 25 basis points to 10.75%.
Banxico cited the preservation of Core inflationgreater exchange rate depreciation, greater price pressures, climate impacts and escalating geopolitical conflicts.
The next monetary policy decision will be made on August 8.
EFE
Source: Aristegui Noticias
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
