Mexico: Banxico leaves benchmark interest rate unchanged at 4%

Eren Sengezer FXStreet

The central bank of Mexico (Banxico) announced on Thursday that it left the benchmark interest rate unchanged at 4%, as expected.

Key takeaways from policy statement as summarized by Reuters

"Board was unanimous on rate decision."

"Balance of risks to inflation has an upward bias."

"In highly uncertain environment, risks for inflation, economic activity and financial markets pose major challenges for monetary policy."

"Recent shocks that have affected inflation, necessary for adjustment in relative prices to take place in an orderly manner so that an impact on price formation and inflation expectations are avoided."

"The revised forecasts for headline and core inflation display short-term levels above those published in the last quarterly report."

"Both headline and core inflation are still expected to converge to the 3% target starting in the second quarter of 2022."

"Annual headline inflation increased more than anticipated in April."

"Inflation expectations for 2021 rose, those for the medium and long terms remained stable at levels above the 3% target."

Market reaction

The USD/MXN pair edged lower on this announcement and was last seen losing 1.05% on the day at 19.9455.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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