Mexico's central bank maintains key interest rate at 11 percent
Date
5/12/2024 4:45:20 AM
(MENAFN) Mexico's central bank has maintained its key interest rate at 11 percent, a decision that aligns with market expectations. This decision follows a 25 basis points reduction in the policy rate to 11.00 percent on March 21 of the same year, as enacted by the Banco de Mexico.
In its statement released on Thursday, the central bank's Governing Board noted a global uptick in economic activity during the first quarter of 2024 compared to the preceding quarter. However, it also observed mixed trends in inflation across advanced economies, with headline and core inflation either decreasing or experiencing slight increases in recent readings.
The Banco de Mexico's last interest rate adjustment occurred in March 2023, when it raised the rate to a historic high of 11.25 percent, marking the 15th rate increase since mid-2021. Despite this, annual headline inflation in Mexico saw a rise from 4.40 percent to 4.65 percent between February and April 2024, driven by an increase in the non-core component. In contrast, core inflation, which provides a better indication of the inflation trend, continued to decrease during the same period, dropping from 4.64 percent to 4.37 percent.
Looking ahead, the central bank noted upward adjustments in expectations for both headline and core inflation by the end of 2024. However, expectations for longer-term inflation remained relatively stable at levels above the target.
The central bank's decision to maintain the interest rate at 11 percent reflects its ongoing efforts to balance economic growth with inflationary pressures. As Mexico's economic landscape continues to evolve, policymakers will closely monitor domestic and global factors to ensure monetary policy remains conducive to sustainable economic development.
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