Friday, October 14, 2011

Banco de Mexico Keeps Interest Rate at 4.50%

The Banco de Mexico held its overnight interest rate target steady at 4.50%.  In its monetary policy statement the Bank noted: "the current monetary policy posture is conducive to achieve the 3.0% inflation objective."  Further commenting: "However, we will remain alert to the prospects for world economic growth and its possible implications for the Mexican economy, which, in the context of great monetary slack in the principal advanced economies could as a result make it appropriate to relax monetary policy."

The Mexican central bank also kept the overnight interest rate target steady at 4.50% at its August meeting.  Mexico reported annual inflation of 3.14% in September, compared to 3.42% in August, while inflation was 3.28% at the end of June, 3.4% April and 3% in March, and within the Bank's inflation target range of 3% +/- 1%. 

The Mexican economy grew 3.3% (4.6% in Q1) year on year in Q2 this year, up 1.1% (0.5% in Q1) from the previous quarter, compared to GDP growth of 5.4% in 2010.  The Mexican peso (MXN) is down almost 10% against the US dollar so far this year, and the USDMXN exchange rate last traded around 13.26.


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