Bank of Mexico Keeps 3.0% Overnight Lending Rate

April 30, 2015

From a peak of 8.25%, Mexico’s key interest rate earlier had been cut by 375 basis points during the first seven months of 2009 and by another 150 bps between March 2013 and June 2014.  There haven’t been any changes since mid-2014, and a statement released after today’s policy meeting defends the current stance because

  • CPI inflation is currently near the 3% target (at 3.1%) and likely to dip under the target a bit by end-year.
  • Cyclical economic conditions show weakness.
  • Inflation expectations remain anchored.

The statement goes on, however, to note some potential factors beyond Mexico’s control that could influence future policy.  Officials warn that Fed tightening could generate selling pressure on the peso.  As it is, officials from time to time have lent FX intervention support.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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