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The Bank of Mexico evaluates a brake on the rise of the interest rate

2023-04-25T21:42:36.164Z


The governor of the central bank, Victoria Rodríguez Ceja, points out that the institution estimates a slowdown in the economy this year, with a "moderate" growth of 1.6%.


The governor of the Bank of Mexico, Victoria Rodríguez Ceja, assured this Tuesday that the institution is considering pausing the increase in the reference interest rate, which has increased by 725 basis points since 2021, to face higher inflation. in almost 40 years.

In an appearance before the Senate Finance and Public Credit Committee, legislators asked to stop the rise to stimulate economic growth, a decision that the governor defended.

Inflation in Mexico reached its peak in August, Rodríguez Ceja mentioned, and has dropped slightly to 6.85%, according to the most recent data from the National Institute of Geography and Statistics (Inegi).

The figure is higher than the Bank's target range of between 2% and 4%.

The part of inflation that is underlying, that is, prices that tend to fluctuate less, has shown a slight improvement.

"Given these positive signs and the monetary position already achieved, we will be evaluating the possibility of stopping the rate," Rodríguez said.

The next monetary policy decision will be announced on May 18.

The reference interest rate in Mexico, which is used by commercial banks to grant loans, reached 11.25% last month, a record high since the current monetary policy is in force.

At least two legislators assured in the appearance that this is a burden for companies seeking to finance their investments, therefore it represents an obstacle to economic growth.

The Bank of Mexico expects the Gross Domestic Product (GDP) to grow 1.6% this year, a slowdown compared to the 3% estimated last year.

Rodríguez pointed out that despite the increases in the interest rate, which began in June 2021, "we have observed strength in the growth of our economy, even in the case of credit, solidity has also been observed, credit has continued to grow ”.

"In the case of the growth of the economy, I would like to point out that we have seen strength both last year, we have already reached levels that are similar to the pandemic and the beginning of this year and we believe that the economy will continue to grow," said the governor, "we believe that The commitment, or the role, that Banco de México has precisely in the growth, in the development of our country, is to continue fulfilling our priority mandate” of maintaining price stability.

When asked about the possible impact of an economic recession in the United States, Mexico's main trading partner, Rodríguez assured that this "would not necessarily have an impact in the same way" in the country, since the Mexican economy has shown resilience both last year as so far this year.

“We believe that, even if the recession scenario [in the US] occurred, which of course would depend on how long and deep it was, we have a moderate growth forecast for the Mexican economy in our central scenario,” he added.

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Source: elparis

All news articles on 2023-04-25

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