LatinNews Daily - 13 October 2023

In brief: Mexico’s Banxico expresses caution on interest rate

*Mexico’s central bank (Banxico) has indicated that it intends to maintain its benchmark interest rate at its current level of 11.25%, where it has been held since March, for longer than previously expected. In minutes of the latest meeting of Banxico’s governing board, members stressed the need to hold the interest rate at its current level “for an extended period” in order for inflation to converge to the target of 3% given that “the inflation outlook will be complicated and uncertain throughout the forecast horizon, with upside risks”. Indeed, one board member stated the bank should maintain the rate “at least for the rest of the year”, with the possibility of extending the rate hold beyond the first quarter of 2024 “if necessary”. The majority of board members noted that forecasts for headline and core inflation had been adjusted upwards to reflect a more gradual decline than previously expected. All noted that inflation is now expected to reach the target level in the second quarter of 2025.

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