Bank of Mexico

July 31, 2015

Mexico’s main central bank interest rate has been kept at 3.0% after another policy meeting.  Such was cut from 8.25% to 4.25% in the first seven months of 2009 and the rest of the way to the current level between March 2013 and June 2014.  Inflation has fallen to a 45-year low somewhat below the target of 3.0%, and growth has slowed to a crawl under the weight of the plunge in global oil prices.  The falling peso, down a bit over 20% in the last year, is a major concern.  While the interest rate was left as is, measures are being taken to blunt peso depreciation, but analysts do not expect these steps to do much.  Mexico has a fiscal and a current account deficit.  Once Fed tightening begins, the Bank of Mexico may have no choice but to follow suit.

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



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