Going forward, the members of Banxico's governing board anticipate that "the inflationary environment will allow for discussion of adjustments in the reference rate."
The governing board of the Bank of Mexico (Banxico) kept the interbank funding rate unchanged this Thursday for the second consecutive time, leaving it at a level of 11.0%.
In a decision of four votes in favor and one to reduce the rate by 25 basis points (by deputy governor Omar Mejía), the members of the governing board reached the decision to leave the rate unchanged after evaluating the behavior of inflation and conclude that “the challenges and risks on both sides of the balance sheet warrant continuing with prudent management of monetary policy.”
Going forward, the members of Banxico's governing board anticipate that "the inflationary environment will allow for discussion of adjustments to the reference rate."
In addition, they reiterated that the actions they will implement in the following months will seek to converge general inflation to the 3% goal by the end of 2025.
“The disinflationary process is expected to continue. Although the depreciation of the national currency has an upward influence on the inflation forecast, its effects are partly offset by those corresponding to the greater weakness of economic activity," said the Banxico governing board in a statement announcing the your decision.
The decision to maintain interest rates comes after general inflation in Mexico has accelerated during the last three months (between March and May). Furthermore, just in the first month of June, inflation picked up again and was above what the analyst consensus expected.
In fact, the governing board slightly raised its inflation expectations for the second and third quarters of this year. However, by the end of 2024 it left its inflation forecast unchanged at 4.0%.
Gabriela Siller, director of analysis at Banco Base, pointed out that the only surprise in Banxico's announcement was that the decision was not unanimous as expected.
HOW DID THE MEXICAN PESO REACT?
The Mexican peso absorbed its loss from earlier in the session following Banxico's announcement. The local currency, which operated at around 18:40 per dollar, and which depreciated to 18:46 minutes before the decision was announced, is trading almost unchanged compared to yesterday's close.
