- Mexico central bank interest rate decision for May 2023
- Mexican central bank keeps rates unchanged at 11.25%
- Mexican Central Bank (MCB) points out downside risks, including a larger-than-anticipated slowdown of the global economy, less impact from cost-related pressures, and improvements in production and distribution chains.
- The balance of risks for inflation within the forecast horizon is biased to the upside according to the MCB.
- MCB projections face risks such as persistence of core inflation at high levels, foreign exchange depreciation due to international financial market volatility, and greater cost-related pressures.
- These pressures continue to affect inflation, which remains high and presents a complex outlook.
- MCB states that the economy has begun a disinflationary process as many pressures have eased.
- Inflation is projected to converge to the 3% target in the fourth quarter of 2024.
- MCB will closely monitor inflationary pressures and all factors influencing the path and expectations of inflation.
- Expectations for 2023 inflation have decreased, while longer-term expectations remain relatively stable at levels above target.
- MCB reiterates its commitment to low and stable inflation and the need for continued efforts to consolidate such an environment.
- Both headline and core inflation remain at high levels, and an orderly and sustained convergence of headline inflation to the 3% target will require maintaining the reference rate at its current level for an extended period.
- MCB predicts a complicated and uncertain inflationary outlook throughout the entire forecast horizon, with upward risks.
- The labor market remains strong and economic activity has been resilient in a complex external environment.
- With the decision to keep the interest rate unchanged at 11.25%, the monetary policy remains in the trajectory required for inflation to converge to its 3% target within the forecast horizon.
- The MCB board unanimously decided on the rate decision.
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- Source: https://www.forexlive.com/centralbank/mexico-central-bank-leaves-benchmark-interest-rate-unchanged-at-1125-20230518/
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