Mexico Keeps Monetary Policy Unchanged
The Bank of Mexico hold the benchmark interest rate at the record low of 4 percent on June 7th as above-target inflation limits the room to stimulate a slowing economy and expectations are growing for the US Federal Reserve to ease back on stimulus.
The Bank of Mexico had cut the benchmark interest rate by 50 basis points in March, and following disappointing economic growth in the first quarter of 2013 expectations have grown for further rate decrease this year.
In the statement, the central bank said it expected annual inflation, which was reported at 4.63 percent in May, to turn down in June and slide quickly below policymakers' 4 percent limit in the second half of the year.
"As a reflection of possible changes in monetary policy in the United States, volatility in the exchange rate could continue, although the strong fundamentals of the Mexican economy will tend to order its behavior in the medium term," the central bank added in a statement accompanying its decision.
The central bank also said recent weakness in the country's peso currency could persist, backing away from concerns in April that financial flows to Mexico could push the peso too high.
6/9/2013 1:18:49 PM