© Reuters. FILE PHOTO: The logo of Mexico’s Central Bank (Banco de Mexico) is seen at its building in downtown Mexico City, Mexico August 9, 2022. REUTERS/Henry Romero/File Photo
(Reuters) – Mexico’s central bank is expected to cut its benchmark interest rate this week, according to a Reuters poll on Tuesday, which would mark the first rate cut since it began its monetary tightening cycle in the mid-2021.
According to the survey, 16 of the 17 analysts polled predicted the Bank of Mexico will cut the rate by 25 basis points to 11%, following in the footsteps of other regional central banks which began to lower their rates last year.
Only one analyst polled by Reuters expects the bank, known as Banxico, to maintain the interest rate at the current 11.25%, where it has been since March of last year, the highest level since 2008.
“The adjustment would respond to the decline in inflation and the current restrictive level of the monetary stance,” said the Actinver firm in an analyst note.
“Despite our expectation of a rate cut, we are not considering the start of an aggressive rate cycle,” it added.
The expected rate cut would be the first since the central bank began tightening monetary policy in June 2021 in the face of inflation, pandemic-era supply chain disruptions and the economic fallout of Russia’s invasion of Ukraine.
During its most recent meeting, the central bank said the the possibility of easing its monetary policy would be on the table, depending on the progress of its efforts to reign in inflation.
The general consumer price index (CPI) slowed more than expected in February, yet it still stood at 4.40% year-on-year, above the goal of 3% +/- percentage points.
Banxico will publish its monetary policy decision on Thursday at 1:00 p.m. local time (1900 GMT).
