Policymakers last cut its benchmark interest rate by 25 bps in October of 2013. Today’s move was quite unexpected.
At the end of May, Central Bank of Mexico lowered its GDP forecasts for 2014 to between 2.3 percent and 3.3 percent from an earlier estimate of 3 percent to 4 percent. The bank also noticed that recent indicators point to a further slack in the economy, as private consumption and investment remain weak and exports' recovery is not enough to offset it. As such, downside risks to growth remain, while risks to the inflation outlook have improved.
The central bank said that no further interest rate cuts are expected.