México - Tasa de Interés

The Central Bank of Mexico slashed its overnight interbank interest rate for the third meeting in a row by 25 bps to 7.50 percent on November 14th 2019, as widely expected. Policymakers said that the current environment of uncertainty continues to pose significant risks that could affect the country’s macroeconomic conditions and added that will continue to monitor closely all factors that have an impact on inflation and its outlook, and will take actions if required. The Committee noted that the annual inflation rate was at 3.02% in October, as both non-core inflation and core inflation decreased over the lasts month and it will likely be below previous forecasts, although core inflation has remained persistent. Policymakers added that in the presence and possible persistence of factors that involve risks to both inflation and its expectations, monetary policy will be adjusted in a timely and firm manner to achieve the convergence of inflation to its target range.

The Central Bank of Mexico slashed further its overnight interbank interest rate by 25 bps to 7.75 percent during its September meeting, the second straight cut this year, as inflation has slowed markedly in recent months while economy remains weak. Policymakers underscored that the balance of risks for growth remains biased to the downside and marked uncertainty persists about risks that could influence inflation. As such, the Board stated that will maintain a prudent monetary policy stance and will follow closely the potential pass-through of exchange rate fluctuations to prices, Mexico’s monetary policy stance relative to that of the U.S and the behavior of slack conditions and cost-related pressures in the economy. The decision was not unanimous, as two members voted to lower borrowing costs by 50 basis points to 7.50 percent.

The Central Bank of Mexico lowered its overnight interbank interest rate by 25bps to 8 percent during its August meeting, the first rate cut since June 2014, saying the balance of risks for growth remains biased to the downside while inflation expectations are relatively stable. Policymakers voiced concerns about the escalation of trade disputes, a disorderly Brexit, and the worsening of political and geopolitical risks. One member of the board voted to keep rates at 8.25 percent.

The Bank of Mexico held its benchmark interest rate at 8.25 percent during its June meeting, as widely expected, saying the balance of risks for growth has become more uncertain and the downward bias has increased while inflation remained above the 3 percent target. The decision was not unanimous, as one member voted to lower borrowing costs by 25 basis points.

The Central Bank of Mexico held its overnight interbank interest rate at a decade high of 8.25 percent during its May meeting, saying inflation expectations increased for both the short and medium terms, while those for the long term remained unchanged, all of them remaining clearly above the 3 percent permanent target. Policymakers also noted that the balance of risks for growth has become more uncertain and remains biased to the downside.

The Central Bank of Mexico kept its benchmark interest rate at a 10-year high of 8.25 percent on 28 March 2019, as widely expected. The decision was unanimous. Policymakers noted that global growth prospects have deteriorated and that domestic prices declined recently, favored by non-core transitory factors. They also underscored that monetary policy will be particularly vigilant of the MXN in case global volatility persists. The annual inflation rate in Mexico declined to 3.94 percent in February 2019 from 4.37 percent in the prior month, matching market expectations. It is the lowest inflation rate since December 2016.