For the third consecutive time and given the current inflation levels, the Bank of Mexico (Banxico) kept its interest rate unchanged at a level of 11.25 percent.
The central bank’s decision was made unanimously by the Governing Board, who also warned that the long-term outlook for inflation will be complicated, uncertain, and with upward risks.
We recommend: Inflation in July reaches 4.79%; accumulates six months down
“With this decision, the monetary policy stance remains on the trajectory required to achieve the convergence of inflation to its target of three percent within the forecast horizon,” Banxico said when announcing its fifth monetary policy decision of the anus.
Yesterday, the Inegi announced that inflation of 4.79 percent was registered in July, the lowest since March 2021 and with which six consecutive months of declines were accumulated.
In this period, inflation fell mainly due to a drop in the cost of energy sources, such as gasoline, electricity or LP gas, which is used by seven out of 10 families in the country.
According to analysts consulted by Citibanamex, Banxico will only apply a cut of 25 basis points to the referential in the remainder of the year and it is estimated that it will be in the monetary policy decision in December.
However, Banxico reiterated that in order to bring inflation to the target level of three percent it will be necessary to maintain the reference rate at its current level “for an extended period.”
“The Governing Board evaluated the magnitude and diversity of inflationary shocks; considered that the disinflation process continued advancing due to the mitigation of various pressures. In addition, he was of the opinion that the inflationary outlook continues to be very complex,” the central institute specified.
According to the institution headed by Victoria Rodríguez Ceja, since the last monetary policy decision made in June, economic activity has shown resilience and higher-than-expected growth.
Likewise, he highlighted that the labor market remains strong and that headline and subjacent inflation is declining, although at high levels.
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“The strong appreciation of the Mexican peso in recent months has contributed to reducing pressure on prices. We believe that Banxico will maintain the policy rate at 11.25 percent until November before a reduction to 11 percent,” said Carlos Morales, director of sovereign risk at Fitch Ratings.
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2023-08-10 19:02:58
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