Bloomberg — Mexico’s central bankers declined to discuss a timeline for the start of an easing cycle before opting to maintain interest rates steady at a record high earlier this month.
The five-member board of Banco de Mexico emphasized it will remain cautious before considering lowering rates from 11.25% given the inflationary outlook, according to the minutes of the meeting published on Thursday. One member said policymakers could possibly stay on hold through the rest of this year.
The bank had said in the statement accompanying its Aug. 10 decision that it would maintain its current stance for an undefined, prolonged period of time.
Mexico’s central bank, known as Banxico, has struck a more hawkish tone than others across Latin America — including in Brazil and Chile — that have begun to reduce borrowing costs to aid growth. Its members have been unanimous in their last few decisions to hold rates, although the minutes showed a split on exactly how cautious they wanted to be, with one reiterating that further tightening could not be ruled out.
One member stressed the need to “continue with a very cautious approach, carefully assessing the outlook for inflation and its determinants,” while another said that “it is still premature to consider a possible cut, even in the case of a fine-tuning to avoid an overly restrictive stance.”
A different member flagged the finances of state oil company Petroleos Mexicanos as a risk factor that should make the bank avoid rushing to cut borrowing costs.
Annual inflation eased to 4.67% in early August, down from a peak above 8% a year ago. Still, core prices – which exclude volatile items like food and fuel – remain sticky and their persistence has been a concern for policymakers.
Gross domestic product growth has been stronger than analysts predicted it would be at the start of the year. Economists in a recent Citibanamex survey forecast that growth will reach 2.9% by the end of 2023.
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