Banxico leaves its interest rate at 11.25%

“The tight monetary conditions, the accumulated appreciation of the peso and the slowdown in general inflation argue against further increases,” Bloomberg Economics noted in a report.

Banxico’s inflation target is 3% with a variability range of one percentage point upwards or downwards. Inflation has been outside this range for 27 consecutive months.

Bloomberg Economics highlighted that the factors limiting the rate cut are persistent uncertainty, persistently high inflation expectations and labor market conditions.

inflation expectations

The members of the Governing Board adjusted the trajectory of inflation marginally downwards.

“Inflation continues to be expected to converge to the target in the fourth quarter of 2024. These forecasts are subject to risks,” Banxico detailed.

The risks for rising inflation are the persistence of subjacent inflation, exchange rate depreciation due to international effects and higher cost pressures.