Treasury and Public Finance Secretary Luis Videgaray (L) said the rise in benchmark interest rates made by the US and Mexico is positive for the Mexican economy. CUARTOSCURO/ISAAC ESQUIVEL
BY OMAR SÁNCHEZ
The News
In sync with the Federal Reserve of the United States and the expectations of the financial agreement, the Governance Board of Mexico’s Central Bank (Banxico) decided to raise the interbank overnight interest rate by 25 base points, which made it go from 3 to 3.25 percent interest.
Following the similar increase made by the U.S. Federal Reserve on Wednesday, Banxico fulfilled its commitment to keep Mexico’s monetary stance consistent with that of the United States.
This new movement in the monetary policy was explained by Banxico’s Governance Board as mainly a response to the interest rate movement made by the U.S. central bank. Refraining to adjust to the current reference rate target level in Mexico could generate an additional disordered depreciation in the value of the national currency, which could affect inflation expectations and the current indicator behavior.
Banxico highlighted the need to defend inflation targets with an increase in lending rates within the proposed goal of 3 percent. Later, it warned that it will continue to monitor the evolution of the inflation’s determinants and its projections in the medium and long term, both foreign and local. Especially, the relative monetary stance between Mexico and the United States, the transfer of exchange rate movements on consumer prices and the evolution of the Mexican economy’s degree of comfort. Treasury and Public Finance Secretary Luis Videgaray Caso said that the rise in benchmark interest rates made by the central banks of the United States and Mexico will have no impact on Mexican families’ pockets and is, instead, good news for the whole country. “This rise does not necessarily translate into an increase on bank users’ rates. With these movements, especially those made by the U.S. Federal Reserve, unknowns are cleared and that’s something positive for our economy,” he said.
These kind of movements are a sign of recovery for the United States, something that is favorable for Mexico, said Videgaray Caso during the last bimonthly meeting of the Mexican Banks Association (ABM).
This recovery is due to the fact that 80 percent of Mexican imports are destined for the United States, so if the U.S. economy grows, the Mexican economy does too.
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