Mexico Monetary Policy


Banxico leaves rates unchanged

At its policy meeting on 21 January, the Central Bank (Banxico) left the policy rate unchanged at 4.50% in a decision broadly expected by the market. The move represented the 17th consecutive month the Bank left interest rates unchanged. Monetary authorities acknowledged that domestic and external demand is gaining momentum. Despite economic activity improving, the Bank reaffirmed its view that inflation will resume a ?clear downward trend in 2011?, as the appreciation of the currency offsets higher commodity prices and as the effect the fiscal measures implemented at the beginning of 2010 leaves the equation. Consensus Forecast panellists broadly share the Bank's assessment and, consequently, anticipate the Bank to maintain a loose monetary policy for an extended period. In fact, a majority of panellists expect Banxico to leave the interest rate unchanged at 4.50% throughout 2011.


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