Mexico’s central financial institution will seemingly carry rate of interest right down to 9.5%: Reuters ballot
MEXICO CITY (Reuters) – Mexico’s central financial institution will seemingly minimize its benchmark rate of interest by 50 foundation factors later this week, taking it to 9.50%, a Reuters ballot confirmed on Wednesday, as inflation cools and the economic system notched a slight contraction late final yr.
Based on the ballot, 14 of 17 economists surveyed anticipate the central financial institution to ship the 50-basis-point minimize, which might comply with 5 25-basis-point cuts final yr. The opposite three economists forecast a 25-basis-point minimize this week.
The central financial institution’s policymaking board lowered the benchmark price to 10.00% in a unanimous vote in December.
Annual inflation in Latin America’s second-biggest economic system slowed to its lowest degree in nearly 4 years within the first half of January, a value degree that’s seen as encouraging Mexican central bankers to maintain slicing charges.
The 12-month headline inflation studying got here in at 3.69% through the first two weeks of January, its lowest degree since early 2021 and falling throughout the financial institution’s goal of three%, plus or minus one proportion level.
In 2022, the speed of rising client costs hit a two-decade excessive at above 8%.
The prospect of a price minimize this week additionally was boosted by knowledge exhibiting Mexico’s economic system contracted by 0.6% within the fourth quarter, marking its first quarter-on-quarter contraction in additional than three years.
If the central financial institution declares a 50-basis-point minimize, the rate of interest can be at its lowest degree since September 2022 and slender the hole between borrowing prices in Mexico and the U.S.
Final week, the U.S. Federal Reserve held its benchmark rate of interest regular within the 4.25%-4.50% vary and indicated it was in no rush to chop once more till U.S. inflation and jobs knowledge warranted it.
The Financial institution of Mexico, recognized domestically as Banxico, is about to publish its rate of interest choice at 1 p.m. native time (1900 GMT) on Thursday in its first financial coverage choice of the yr.
(Reporting by Noe Torres; Extra reporting by Gabriel Burin; Modifying by Paul Simao)
