Mexico Monetary Policy


Banxico maintains monetary policy stance

At its meeting on 8 March, the Central Bank (Banxico) left the policy rate unchanged at 4.50%, in a decision broadly expected by the market. The move represented the 18h consecutive month the Bank has left interest rates unchanged. Monetary authorities maintained the same tone as previous months. Moreover, Banxico acknowledged that economic activity is gaining momentum and that inflation has declined so far this year, despite higher prices for corn and an increase in cigarette taxes. However, Banxico also stated that, in case price pressures should unexpectedly emerge, the Bank would make timely adjustments to its monetary policy stance in order to meet the permanent inflation target of 3.0%. Consensus Forecast panellists expect the Bank to maintain a loose monetary policy for an extended period and, in fact, a majority of panellists see Banxico leaving interest rates unchanged at 4.50% throughout 2011.


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