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Business & Finance

Mexico's central bank seen maintaining key rate at 4.0pc

  • The central bank in February cut its benchmark interest rate by 25 basis points to 4pc, flagging uncertainty over the outlook.
Updated 23 Mar 2021

MEXICO CITY: The Mexican central bank is seen keeping its benchmark interest rate steady at its next monetary policy meeting on Thursday as inflation ticks up amid the battered economy's recovery from the coronavirus pandemic, a Reuters poll showed on Monday.

Fourteen of the 23 analysts surveyed said they expect the Bank of Mexico to hold the rate unchanged at 4.0pc.

The other nine participants anticipate Banxico, as the central bank is known, will lower the rate by 25 basis points.

The central bank in February cut its benchmark interest rate by 25 basis points to 4pc, flagging uncertainty over the outlook.

Mexico's economy last year suffered its worst decline since the Great Depression of the 1930s, shrinking by 8.5pc.

Annual inflation accelerated more than expected in February, and consumer prices in the first half of March are expected to advance close to the upper limit of the central bank's target range.

Banxico aims for a rate of 3pc with a one percentage point tolerance threshold above and below that.

"Inflation is rising and we think it will surpass Banxico's target," said Nikhil Sanghani, an economist at Capital Economics.

Banxico will publish its monetary policy statement on Thursday at 1 p.m. (1900 GMT).