Banxico Delivers Fourth Consecutive Rate Cut as Growth Stalls

Mexico’s central bank delivered its fourth quarter-point reduction in a row opting to continue the cautious pace of easing despite the economy having ground to a halt, the Financial Times reported. Banxico on Thursday lowered its key lending rate to 7.25 per cent as expected. Only one of the five board members voted for a half-point cut, the bank said in a statement. While the central bank had room for a bolder move, analysts said there were lingering concerns about core inflation and fears a surprise bigger cut could wipe out the peso’s recent gains. BBVA economists said in a note that “A 50bp [move] would be more appropriate but Banxico is unlikely to speed up the easing pace. “In our opinion, Banxico believes that the main factor behind the recent strength of the peso is the large interest rate spread between Banxico’s monetary policy rate and the fed funds rate. Read more

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