Ciudad de Mexico, 7 de febrero de 2019
Today, Banco de México decided unanimously to keep the overnight rate at 8.25%, in line with market expectations, specialists’ surveys, and our forecast. This due to no significant changes in the evolution of inflation and its determinants, as well as to more slack in the economy.
Banxico confirms a slowdown in the expansion of the global economy in Q4 2018.
The Central Bank assesses that economic activity in Mexico would show a significant deceleration in Q4 2018, and that this could extend to the beginning of 2019.
The communiqué states that inflation went down from 4.72% to 4.37% between November and January.
In line with our expectation, the communiqué included elements that show a less hawkish stance: i) Banxico sees more slack in the economy, not only for the end of 2018 but for the beginning of 2019; ii) the reference to “structural risks for inflation arising from the possible adoption of policies that could produce profound changes in the price formation process” was eliminated; and iii) the specific mention of a possible future strengthening of monetary policy if conditions warrant was omitted.
It is worth noting that the Bank’s pointed out the need to strengthen the rule of law and tackle corruption to strengthen the macroeconomic framework. We will closely follow the discussion within the minutes in this regard.
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