Mexico central bank cuts interest rate

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Mexico central bank cuts interest rate

Banco De Mexico cut interest rate by 25 basis points (7.75%) after the second meeting of the board of Mexico’s central bank. This is done in expectations of an economic recuperation as inflation slows down.

The board, consisting of 5 members, decided to decrease the overnight interbank rate by 25 basis points. Two of the five members, however, wanted to extend the cut to 50 basis points according to Banxico.

“Considering the reduction of the headline inflation, the ample slack in the economy and the recent behavior of external and domestic yield curves, the Bank of Mexico’s governing board decided by majority to lower the target for the overnight interbank interest rate to 7.75%, said Banxico.

According to the latest data, Mexico’s economy was down by 0.1% at the start of the third quarter. Banxico remained positive stating that the worse will turn to worst.

“Although economic activity in the previous quarters and in July remained stagnant, it is expected to recover slightly over the rest of the year,” said Banxico.

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