The Bank of Mexico, abbreviated BdeM or Banxico, sets the benchmark interest rate at 7%, although Reuters reports that the board was not unanimous on rate decision with one member of the board voting to hike rates to 7.25%.
Key notes
- Banxico says another four board members voted to hike the rate to 7.00%.
- Says for the next monetary policy decisions the board will monitor thoroughly the behaviour of inflationary pressures and factors impacting foreseen path for inflation and its expectations.
- Says preliminary information suggests that economic activity rebounded during the first quarter of 2022.
- Says given the growing complexity in the environment for inflation and its expectations, taking more forceful measures to attain the inflation target may be considered.
- Says an environment of uncertainty and ample slack conditions continues to prevail, although the latter narrowed compared to the previous quarter.
- Says in view of greater-than-anticipated pressures on inflation, forecasts for headline and core inflation were revised upwards up to the second and third quarters of 2023.
- Says, however, convergence to the 3% target in the first quarter of 2024 is maintained.
- Says the balance of risks for the trajectory of inflation within the forecast horizon remains biased to the upside and continues deteriorating.
- Says took into consideration increasing challenges posed by tightening global monetary and financial conditions, the environment of significant uncertainty, and greater inflationary pressures associated with geopolitical conflict.
- Says in addition to shocks that have affected inflation throughout the pandemic, now there are pressures associated with geopolitical conflict and strict lockdown measures recently imposed by China.
The peso is a touch stronger on the decision with USD/MXN down 0.17% at 20.2685.
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