By www.CentralBankNews.info Mexico’s central bank left its benchmark interest rate unchanged at 4.50 percent, as expected, but switched course and said it may now have to cut interest rates in light of lower growth and inflation.
Banco de Mexico, which in recent months has warned that it may have to raise rates if inflation picked up speed, said the balance of risks to inflation had improved, especially in light of the government’s commitment to sound public finances, and headline inflation this year is expected to fall below last year’s level to around the central bank’s 3.0 percent target.
Core inflation is expected to fall below the 3.0 percent level, the bank said.
“To consolidate the described environment, it may be advisable to reduce the interbank interest rate to facilitate the adjustment of the economy to lower economic growth and lower inflation,” the central bank said, adding: “In any event, the Board will monitor the progress of all the factors that could affect inflation in order to be able to reach the 3 percent target.”