Mexican Central Bank Rate Unchanged

December 5, 2011

The overnight Mexican interbank rate was kept at 4.5% after last Friday’s central bank monetary policy meeting.  That’s been its level since 375 basis points of reduction were implemented during the six months to July 2009.  Earlier three straight hikes had established a cyclical peak of 8.25% in August 2008.  A statement from central bank officials noted slower export demand spilling over into Mexico’s economy with the effect of a reduced rate of exhaustion in Mexican unused productive resources.  Core service-sector CPI inflation has been low, and officials expect a recent uptick of headline inflation to be temporary.  They observe lessening sensitivity of inflation to peso depreciation than was the case historically and believe that the 3% medium-term inflation target will be met.  Growth risks around their baseline forecast are downwardly skewed, while price risks are considered to be balanced.  That said, officials promise to carefully monitor determining factors of inflation to ensure that the target stays attainable.

Copyright 2011, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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