The central bank of Mexico announced on Thursday that it raised its policy rate by 50 basis points to 6.5% after its March meetings, as expected.
Key points of the policy statement
“The board was unanimous on the rate decision.”
“Available indicators suggest that the Mexican economy could have resumed its recovery in early 2022.”
“With this action, the monetary policy stance is adjusted to the trajectory required for inflation to converge to its 3% target in the projection horizon.”
“An environment of uncertainty prevails and conditions of wide slack, although the latter is expected to be less wide than in the previous quarter.”
“Medium-term expectations for headline inflation were revised upwards at the margin, while those for core inflation remained unchanged and long-term expectations have remained stable at levels above the target.”
“For the next monetary policy decisions, the board will closely monitor the behavior of inflationary pressures and the factors that affect the expected trajectory for inflation and its expectations.”
Given the higher inflationary pressures, the headline and core inflation forecasts were revised upwards significantly for the entire horizon and convergence to the 3% target is now expected to be reached in the first quarter of 2024.”
“In addition to the shocks that have affected inflation throughout the pandemic, there are pressures associated with geopolitical conflict.”
“The balance of risks to the path of inflation within the projection horizon has deteriorated and remains biased to the upside.”
market reaction
The USD/MXN pair showed no immediate reaction to the rate hike decision and was last seen losing 0.4% on the day at 20.1325.
Source: Fx Street
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