Friday, March 16, 2012

Banco de Mexico Holds Interest Rate Target at 4.50%

The Banco de Mexico held its overnight interest rate target steady at 4.50%.  The Bank said [Google Translated]: "From the foregoing, the Governing Board considers that the current stance of monetary policy is conducive to achieving the goal of permanent inflation of 3%, so we decided to keep unchanged the target for the interbank interest rate one day. Going forward, the Board will remain attentive to the prospects for growth of the Mexican economy, inflation and financial markets, which in a context of strong monetary laxity in major advanced and emerging countries, could make recommended a relaxation of monetary policy."

The Mexican central bank also kept the overnight interest rate target steady at 4.50% at its previous meeting.  Mexico reported annual inflation of 3.9% in February, up from 3.8% in December, 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 5% against the US dollar over the past year, and the USDMXN exchange rate last traded around 12.67.


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