Central Bank Mexico

Wikipedia

Mexico's central bank shocks analysts with interest rate cut

Банк Мексики Банкнота 50 песо (лицевая сторона)

Analysts expressed shock Thursday at a decision by Mexico's central bank to cut interest rates. The move came as a surprise to many, who had expected the bank to keep rates on hold or even raise them in an effort to combat rising inflation.

Banco de México lowers interest rate target

The Bank of Mexico lowered its benchmark interest rate target by 50 basis points to 4.5%, the lowest level since 2017. The move was seen as a surprise by many, who had expected the bank to keep rates on hold or even increase them. The bank said the decision was made in light of the "unfavorable external environment," including the ongoing trade dispute between the United States and China.

Inflation concerns

The bank's decision to cut rates comes at a time when inflation is rising in Mexico. The annual inflation rate in Mexico rose to 4.1% in August, the highest level since April 2018. The bank said it expects inflation to remain above its target of 3% for the rest of the year.

Market reaction

The peso weakened against the U.S. dollar following the bank's decision. The peso fell 0.5% to 19.15 per U.S. dollar. The stock market also reacted negatively, with the benchmark IPC index falling 1.5%.

1