Bank of Mexico Remains on Hold

June 11, 2012

Mexico‚Äôs key interest rate has been at 4.5% since July 2009 and will remain at that level for the time being.  Policymakers met last Friday and reaffirmed that the current stance is promoting the medium-term inflation target of 3% while protecting the recovery amid an uncertain global environment.  The central bank authorities revised their forecast for GDP growth in 2012 upward by 0.25% to a range of 3.25%-4.25%.  Inflation this year will be at or somewhat above 3%.  Risks to the growth forecast have deteriorated, but price risks are unchanged.  Expected inflation is well-anchored despite a near-10% peso slide between mid-March and mid-May.  There is some slack in the economy, but such should get trimmed.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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