Mexico prepared to act if inflation, risks stay low

Bloomberg

Mexico’s central bank could take monetary policy action as soon as February if it sees that inflation as well as internal and external risks remain low, Governor Alejandro Diaz de Leon said in an interview.
“We have to monitor if conditions in the economy continue having this favorable trend in terms of inflation and lower external and internal risks, and if this occurs it allows us to take monetary policy actions,” he said. “But this is precisely what we’ll be monitoring from now until the next decision.”
The central bank has cut borrowing costs by a quarter point in each of its past four rate decisions to 7.25%, but still has one of the highest real rates in the world. That’s fueled division within the board about how quickly it should ease monetary policy without risking a rebound in inflation and peso volatility.
Inflation has slowed markedly, and even fell below target to 2.63% in early December. The peso has been the best performing major emerging market currency this year.