No Rate Change from the Bank of Mexico

December 6, 2013

After overnight lending rate cuts this year of 50 basis points in March 25 bps in September and, most recently, 25 bps to 3.0% on October 25, Bank of Mexico policymakers seem satisfied with the status quo and likely to remain so for another year of more.  That’s the implication of the latest interest rate policy statement released today.  The macroeconomic task of promoting faster recovery in 2014 is to fall upon fiscal policy stimulus.  Core inflation is presently below the 3.0% central bank target, and headline inflation has dropped 1.2 percentage points over the past half year.  Mexico’s economy has considerable amounts of underutilized productive resources, so GDP can grow 3-4% for quite a while before the monetary authorities will need to react to an inflationary threat.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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