The Bank of Mexico “Banxico,” stated in a study that Mexico’s strong labor market and domestic expenditure are contributing to the economy’s resilience.
The report reaffirmed previous language that the governing board would need to retain its benchmark interest rate at its all-time high for an “extended term” in order to bring persistent inflation back within the bank’s target range.
Banxico kept Mexico’s benchmark interest rate constant at 11.25% earlier this month for the third time in a row, after annual inflation fell to 4.79% in July for the sixth time in a row.
Falling inflation in Latin America has prompted central banks to begin cutting interest rates, especially in Brazil and Chile.
“The question of whether we will lower interest rates is not on the table yet,” said Banxico Governor Victoria Rodriguez at the report’s presentation.
Rodriguez noted that the board of Banxico required more time and greater proof that inflation was returning to its target.
The Bank of Mexico also reduced its headline inflation prediction for the fourth quarter of 2023 to 4.6% from 4.7% earlier.
However, it boosted its quarterly core inflation projection to 5.1% from 5.0% earlier.
