The Banco de Mexico (Banxico) adjusted “so timely and firm” its monetary policy to achieve convergence of inflation to the target, although the balance of risks to economic growth is skewed to the downside, said the Board of Governors in the minutes of its most recent decision published this Thursday.
The central bank maintained the key interest rate at 8.25% at the end of March amid lower inflationary pressures, a weakened economy and little expectation of new increases in the cost of funding by the Federal Reserve of States United.
Not everyone agrees
While the decision to maintain the reference rate for the second time in a row was unanimous, the deputy governor of the board, Gerardo Esquivel, did not agree with the restrictive tone of the decision statement or the conclusion on the balance of risks for inflation.
Most of the board of Banxico said the expectations of inflation in the medium and long term are being located above the permanent target of 3%, about 3.5%, although in January and February it decreased. In this regard, Gerardo Esquivel argued that “the recent evolution of the various inflation indicators in Mexico described in the document itself, as well as policy changes recently announced by the Federal Reserve and the European Central Bank, opened space to issue a statement with a more neutral tone. ”
All board members reiterated that the balance of risks for economic growth continues to be downward biased and most agreed that the available information suggests that at the beginning of 2019 economic activity continues to show low growth.