Mexico Leaves Rate on Hold for Second Time

At its January 31st, 2014 meeting, Bank of Mexico decided to leave the overnight interbank rate unchanged at 3.5 percent, as widely expected. The central bank said that risks to the inflation rate have deteriorated.

The bank noted that the balance of risks to growth have improved since last meeting, as recent developments in the US could spur the external sector, while structural reforms would boost domestic investment in the medium-run. Yet, the bank also noticed that monetary policy adjustment in the US may affect the capital flows in emerging markets. 

The bank also said that risks for inflation due to the possible impact of external volatility on the peso had deteriorated.

The bank expects the inflation rate to rise to around 4 percent in the first months of 2014 due to the impact of recent fiscal measures, but expects prices to slow down to around 3 percent by the end of the year. 

Mexico Leaves Rate on Hold for Second Time

Joana Taborda |
1/31/2014 4:27:36 PM