Central Bank of Mexico Holds Interest Rate at 4.50%

The Banco de Mexico held its overnight interest rate target steady at 4.50%.  The Bank said [Google Translated]: "the Governing Board believes that the current stance of monetary policy is conducive to achieving the goal of permanent 3% inflation, so has decided to maintain unchanged the target for the interbank interest rate. However, they remain attentive to the outlook for global economic growth and its possible implications for the Mexican economy, which in a context of strong monetary laxity in major advanced countries, in the end could make a suitable policy easing. Also, the Board will continue to closely monitor the behavior of all the determinants of inflation that might alert about widespread pressures on prices to adjust timely monetary stance, seeking at all times the convergence of inflation to its permanent objective of 3%."

The Mexican central bank also kept the overnight interest rate target steady at 4.50% at its previous meeting.  Mexico reported annual inflation of 3.8% in December, up slightly from 3.2% in October, 3.14% in September, 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 4.5% (3.2% in Q2, 4.5% in Q1) year on year in Q3 last year, up 1.3% (1.3% in Q2, 0.6% in Q1) from the previous quarter, compared to GDP growth of 5.4% in 2010.  The Mexican peso (MXN) is down about 10% against the US dollar over the past year, and the USDMXN exchange rate last traded around 13.2.

www.CentralBankNews.info