Mexico city at goldenhour

Mexico Monetary Policy May 2024

Mexico: Central Bank maintains rates in May

At its meeting on 9 May, the Central Bank decided to keep the target for the overnight interbank interest rate unchanged at 11.00%, following a rate cut at the prior meeting in March.

The decision to pause rate cuts was driven by a rise in inflation since the prior meeting, as well as upward revisions to the Bank’s inflation forecasts for the remainder of this year. The upward revisions were due to more-persistent-than-expected services price pressures, with inflation now only expected to return to the 2.0–4.0% target range at the end of 2024.

The Central Bank did not provide clear guidance on future interest rate movements. The Consensus among our panelists is for rate cuts to resume later this year, though any upward inflation surprises or delay to the Federal Reserve’s monetary policy easing could push back rate cuts in Mexico.

Giving their take on the outlook, Goldman Sachs analysts said:

“At this juncture we forecast a moderate 25bp rate cut at the June meeting, unless the data set is clearly unfriendly, and the policy rate to reach 9.50% by end-2024, with risks skewed to the upside.”

On inflation forecasts, Scotiabank analysts said:

“Despite constant upward revisions, Banxico’s inflation forecasts remain below private-sector expectations over most of the forecast horizon. In our opinion, the continuous revisions to Banxico’s forecasts could hinder their communication efforts and complicate the process of anchoring inflation expectations, particularly in the current environment of high uncertainty about price dynamics, which would inject further uncertainty in the trajectory of monetary policy.”

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