Banxico slows the interest rate: it keeps it at 11.25%

The board of directors of Bank of Mexico unanimously decided to maintain its reference interest rate to 11.25% and maintain it at its current level for an extended period.

However, in order to achieve an orderly and sustained convergence of headline inflation at the 3% target, it considers that it will be necessary to maintain the reference rate at its current level for an extended period. In addition to adjusting its headline inflation forecast slightly downwards for some quarters and keeping core inflation virtually unchanged.

In making this decision, board members assessed the breadth and diversity of inflationary shocks and its determinants, as well as the evolution of medium and long-term expectations and the process of price formation.

Thus, “he considers that a phase of disinflation because various pressures have been alleviated. However, he judged that these continue to affect the inflationwhich remains high, and that the inflationary panorama remains very complex”.

They will maintain the Banxico interest rate in 2023

Based on the above and given the monetary position reached in this bullish cycle, the board of directorsin the presence of all its members, unanimously decided to maintain the objective of the Interbank interest rate one day at 11.25%.

In his statement, he also clarified that with this decision, the position of Monetary Policy it remains on the path required to bring inflation closer to its 3% target over the forecast horizon.

The Council has indicated that it will follow closely the inflationary pressuresas well as all the factors that affect the projected path for inflation and its expectations.

He believes that the outlook for inflation will be complicated and uncertain over the entire forecast horizon, with upside risks, so that to achieve the orderly and sustained convergence of headline inflation towards the 3% target , “he considers that it will be necessary to maintain the reference rate at its current level for an extended period.

Will inflation go down?

Regarding his inflation forecast, he said that it is still expected to converge towards the target in the fourth quarter of 2024, even if he considers that the balance of risks compared to its expected trajectory over the horizon of forecast remains biased upwards.

Upside risks include the persistence of Core inflation at high levels; currency depreciation in the event of international financial volatility; increased cost pressures; and pressures on the prices of energy or agricultural products.

While downside risks identified a greater than expected slowdown in the global economy; less pass-through of certain cost pressures; better functioning of production and distribution chains; and a larger-than-expected effect of federal government measures to address shortages.

However, he slightly modified the lower inflation annual stock at 6.0 versus 6.3% for the second quarter of 2023; at 5.2 against 5.3 for the third quarter; already 4.7 out of 4.8 for the fourth quarter; while in the underlying at 4.3 from 5.3% from April to June 2023.

Keep reading:

Inegi announces economic growth in Mexico of 0.4% in April 2023

Who is the German Larrea? The man who could be the new owner of Banamex

Seven banks in Mexico control 79% of credit cards