Mexico city at goldenhour

Mexico Monetary Policy March 2022

Mexico: Banxico delivers seventh consecutive rate hike in March

On 24 March, the Governing Board of the Bank of Mexico (Banxico) opted to raise the target for the overnight interbank interest rate by 50 basis points to 6.50%, marking the seventh consecutive hike and the second such hike this year.

The Bank’s decision was part of an ongoing attempt to keep inflation under control and stop inflation expectations from becoming de-anchored. Both headline and core inflation have been running well above the Bank’s 2.0–4.0% target range for some months now. Moreover, Banxico commented that both its own inflation forecasts and those of the market had increased again—likely in part due to the war in Ukraine and the knock-on effect on global commodity prices. The Bank does not see a return to the target range until 2023.

In its communiqué, Banxico did not provide explicit guidance on future rate movements, but stated that it would “monitor thoroughly the behavior of inflationary pressures” going forward. Our panelists anticipate that further monetary tightening is highly likely ahead in order to dampen inflation.

Cristobal Arias Ortega, head of Arimato Metrics, said:

“Government interventions have mitigated the impact of higher energy costs on domestic gasoline prices. However, higher commodity prices seem to be expanding to other goods in the consumption basket that rely on agricultural commodities. Finally, the ongoing tightening of the Fed’s funds rate will remain an additional source of pressure for the Mexican peso. In our view, Banxico will continue to hike rates for the rest of the year until the inflation rate shows clear signs of cooling off, possibly from the second half of this year. For now, we expect the Bank to increase its policy rate at least by another 100bps throughout 2022.”

The next monetary policy decision will be announced on 12 May.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest X Download Fullscreen