Mexico central bank to keep 4% rate amid inflation debate

Bloomberg

Mexico’s central bank is seen holding its key interest rate at a five-year low, as policy makers expect that recent price shocks will prove to be transitory.
The bank, known as Banxico, unanimously voted to keep borrowing costs at 4% in its last two meetings, after inflation hit 5.9% in May — far above the bank’s 4% target ceiling. All of the 23 economists surveyed by Bloomberg expect the bank to hold the key rate unchanged again.
“Nothing is going to change, not in the decision, not in the rate, not in the unanimity, not in the statement,” said Jessica Roldan, chief economist at Casa de Bolsa Finamex SAB. “It’s just going to demonstrate that the bank is waiting to see how inflation data evolves in the next few months.”
The decision will be published on the central bank’s website at 1:00 pm local time in Mexico City, together with a statement from the bank’s board. These are the most important points investors will be focusing on:
The bank will likely remain data dependent, rather than giving forward guidance, said Pamela Diaz Loubet, an economist at BNP Paribas SA, who will be watching to see if it changes its current expectation that inflation will hit the 3% target in the second quarter of 2022.