Bank of Mexico Decides Not to Raise Interest Rate after Latest Policy Review

August 2, 2018

The Governing Board kept its overnight interbank interest rate at 7.75% but observed in a released statement that “since the last monetary policy decision, the balance of risks to the forecasted trajectory of inflation remains biased upwards, in an environment of high uncertainty.” There had been two 25-basis point hikes this year — in February and at the prior review on June 20 — as well as four such increases and one of 50 bps during 2017 and 250 basis points of tightening in 2016.

The statement concludes with a promise to ” maintain a prudent monetary policy stance and will continue to follow closely the potential pass-through of exchange rate fluctuations to prices, the monetary policy stance relative to that of the U.S., and the conditions of slack in the Mexican economy. In the presence and possible persistence of factors that, by their nature, involve risks to both inflation and inflation expectations, monetary policy will be adjusted in a timely and robust manner to achieve the convergence of inflation to its 3% target and to firmly anchor medium- and long-term inflation expectations so that they attain such target.”

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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