Mexican cenbank leaves key rate intact

Bnamericas Published: Thursday, February 04, 2016
Mexican cenbank leaves key rate intact

The Mexican central bank (Banxico) announced on Thursday it is leaving the key interest rate intact at 3.25%.

The decision was widely expected by analysts.

Banxico had raised the benchmark rate by 25 basis points in December for the first time since 2008 in response to the US Fed's hike the day before.

Mexican central bankers have said they will keep a close eye on monetary policy in the US to avoid capital outflows and ensure financial stability.

There was no strong reason for a rate hike this month considering a domestic scenario of low inflation and weak economic growth, and the fact that the Fed did not move its rate target last month.

Mexico's inflation last year was an all-time low of 2.13% while the economy grew below potential at an estimated 2.5%.

In the statement announcing the latest rate decision, the Banxico board said that short and long-term inflation expectations are more or less in line with its 3% target.

The board said it will also continue to monitor the risk of so called imported inflation from the depreciation of the Mexican peso.

Picture: Central bank governor Agustín Carsten.


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