Mexico's central bank raises its policy rate by 50 basis points to 6.5%

Mexico's central bank announced Thursday that it raised its policy rate 50 basis points to 6.5% after its March meetings. This was as expected.

Mexico's central bank raises its policy rate by 50 basis points to 6.5%

The key takeaways from the policy statement

"Board unanimously approved rate decision"

"The available indicators suggest that the Mexican economic recovery might have begun in early 2022,"

"With this action the monetary policy adjusts to the trajectory needed for inflation to converge at its target of 3% within the forecast window."

"An environment of uncertainty prevails, with ample slack conditions expected to be lower than in the preceding quarter."

"Medium-term inflation expectations for headline inflation were raised at the margin. Core inflation expectations were unchanged. Longer-term expectations remained stable at levels higher than the target.

"The board will closely monitor the behavior of inflationary pressures, factors impacting the foreseen path to inflation, and its expectations, for the next monetary policy decision."

"Given increased inflation pressures, forecasts of headline and core inflation were significantly revised upwards for the entire time horizon. Convergence to the 3% target can now be expected to occur in the first quarter 2024."

"Besides the shocks that affected inflation during the pandemic, there have been pressures associated to the geopolitical conflict."

"The balance of risks regarding the trajectory of inflation within our forecast horizon has deteriorated, and is still biased towards the upside."

Reaction of the market

The USD/MXN currency pair did not react immediately to the rate increase decision. It was last seen losing 0.4% daily at 20.1325


 

NEXT NEWS