Bank of Mexico Overnight Rate Left at 4.5%

September 24, 2010

Mexico’s benchmark interest rate will remain at 4.5%, which it has been since July 2009.  The decision not to raise the rate from its nearly 7-year low had been expected by analysts and was defended in a released statement by the following points:

  • CPI inflation of 3.7% has been running below expectations.
  • Projected growth in the advanced economies has been lately revised downward.
  • The peso/dollar rate has been stable.
  • Although Mexican exports and factory output are running at a good pace, private domestic demand continues to lag and could use the support of the accommodative monetary policy.

The Bank of Mexico cut rates seven times between the end of 2008 and July 2009, reducing such by 375 basis points in total from a prior 8.25%. 

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



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