MEXICO CITY (Reuters) -The Bank of Mexico, in a unanimous decision by its five-member board, kept its benchmark interest rate steady at 11.25% on Thursday, ending a nearly two-year rate-hike cycle, and said it would keep the rate at that level for an extended period.
The decision was in line with analysts’ expectations.
To get inflation to its target of 3%, plus or minus a percentage point, Banxico, as the Mexican central bank is known, said it “considers that it will be necessary to maintain the reference rate at its current level for an extended period.”
Banxico projected that inflation would reach its 3% target in the fourth quarter 2024, stressing that the inflationary outlook will be “complicated and uncertain” throughout the entire forecast horizon, with upward risks.
Banxico had raised its key interest rate by 725 basis points since June 2021 to combat rising consumer prices.
Annual inflation peaked in August and September at a more than two-decade high of 8.70%, slowing to 6.25% in April, the lowest level since October 2021.
While that is considerably higher than Banxico’s target, the bank said “it considered that the economy has started to undergo a disinflationary process given that many pressures have eased.”
Gabriela Siller, an analyst at Banco Base, estimated Banxico’s first rate cut could come in December if inflation continues on its downward trend.
(Reporting by Anthony Esposito, Dave Graham and Valentine Hilaire; Editing by Bill Berkrot)
