The Bank of Mexico (Banxico) considers it necessary to maintain the interest rate at 11.25%its highest level in history, for a “prolonged period” despite the slowdown in inflation, according to a minute of its Governing Board revealed this Thursday.
In order to achieve the orderly and sustained convergence of general inflation to the 3% target, (the Governing Board) considers that it will be necessary to maintain the reference rate at its current level for a prolonged period,” the central bank text indicated.
The members of Banxico estimated that “the inflationary panorama will be complicated and uncertain throughout the entire forecast horizonwith upside risks.
Despite noting that “various inflationary pressures have been mitigating”, the members of the autonomous body recognized that the balance of risks of the expected trajectory for inflation “remains biased upwards”.
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The minutes correspond to the meeting of June 22, when the Governing Board kept the interest rate unchanged at 11.25% for the second consecutive time, the highest level in its history, in a decision that reflects the end of its term. bullish.
The report is published one day before the general inflation for June 2023, the close of the first half of the year, after the rate fell to 5.84% annually in May, its lowest level since August 2021.
in session, Banxico forecast headline inflation to average 4.6% annually in the last quarter of 2023 after the previous expectation of 4.7%.
Given the improvement in indicators, the majority of the Governing Board “considered that the monetary tightening achieved has contributed to the performance of inflation.”
On the other hand, the central bank highlighted that Mexico’s economic activity “has shown resilience in the face of a complex external environment” after growth of 3.7% year-on-year and 1% quarterly of gross domestic product (GDP) in the first quarter of the year.
But “most noted that some timely indicators point to a slowdown in the second quarter.”
The next decision of the Bank of Mexico on monetary policy will be on August 10.
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EFE International news agency based in Madrid and present in more than 110 countries.