Banxico Halts Interest Rate Hikes
The Central Bank of Mexico (Banxico) announced late Thursday, May 18, that it will keep the key interest rate unchanged at 11.25 percent indefinitely, putting an end to consecutive rate hikes since June 2021, as the country enters into what Banxico called a “stage of disinflation.”
The Mexican central bank’s five-member governing board unanimously voted against adjusting the target overnight interbank interest rate, claiming that the current rate will help meet the government’s target inflation of 3 percent.
“The governing board evaluated the magnitude and diversity of inflationary shocks and their determinants, as well as the evolution of medium- and long-term expectations and the price formation process,” the bank said in a statement.
The board said that it believes the economy has started to undergo a disinflationary process given mitigated inflationary pressures.
However, the inflationary outlook will be “complicated and uncertain” toward the end of 2024, with potential increases in the price of energy or agricultural goods, it said.
The bank said it expects inflation to stand at 4.7 percent at the end of 2023 and 3.1 percent at the end of 2024.