Mexican Benchmark Interest Rate Not Cut Further

August 21, 2009

As analysts expected, the Banco de Mexico left its key interest rate at 4.5% after its August meeting today.  Cuts in each of the first seven months of the year had cumulated to 375 basis points from an 8.25% level at the start of the year.  There had been cuts of 75 bps in March, April and May, 50 bps in January and June and 25 bps in February and July.  Positive growth is expected to resume in the second half of 2009 but to still post a drop of around 7% in the full year.  Industrial production dropped 10.9% in the year to June.  CPI inflation has declined to 5.4% from 6.5% at the end of 2008 and will continue to ease, a statement released today  predicted.  The medium term target is 3%.

Copyright Larry Greenberg 2009.


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