A Reuters poll revealed that on March 27, Panco de Mexico (Pancico) is expected to reduce interest rates by 50 basis points amid the development of the inflation and continuous economic slowdown.
Economists expect prices to rise to 8.25 % in 2025
Of the 25 economists, 23 of the central bank expects to reduce borrowing costs by 50 basis points, from 9.50 % to 9.00 %. Two economists estimate that the Mexican Central Bank will maintain rates unchanged.
This will be the second reduction in this size, after the February meeting in which the Governing Council agreed to reduce the main reference rate from 10.00 % to 9.50 % on the 4 to 1 division, with Deputy Governor Jonathan Heath opposition, voting to reduce rates of 25 basis points.
Although Pancico is the control of inflation, the recent economic slowdown prompted the Mexican Foundation to alleviate policy, as policy makers justified that with the cooling of the economy, so inflation.
Besides, the economic list in Mexico is busy next week, with inflation data issued in mid -March, retail sales, and trade balance data.
Pancico is common questions
Mexico Bank, also known as Pancico, is the central bank in the country. Its mission is to maintain the value of Mexico, Mexican Peso (MXN), and control of monetary policy. To this end, its main goal is to maintain low and stable inflation within the target levels – at or close to its 3 % goal, the center point in the tolerance range ranges between 2 % and 4 %.
The main tool for banknotes for monetary policy guidance is to determine interest rates. When inflation is higher than the target, the bank will try to tame it by raising prices, which makes it more expensive for families and companies to borrow money and thus cool the economy. The highest interest rates are generally positive for Mexican Peso (MXN) because it leads to higher returns, making the country a more attractive place for investors. On the contrary, low interest rates tend to weaken MXN. The difference in the average with the US dollar, or how Banxico is expected to determine interest rates compared to the Federal Federal Reserve (Fed), which is a major factor.
Pancico meets eight times a year, and its monetary policy is greatly affected by the US Federal Reserve decisions (Fed). Therefore, the Central Bank Resolution Committee usually gathered a week after the Federal Reserve. When doing this, Pancico interacts and sometimes expects monetary policy measures set by the Federal Reserve. For example, after the Covid-19 pandemic, before raising the federal reserve rate, Pancico was first trying to reduce the chances of a significant decrease in the Mexican Bzo (MXN) and to prevent capital flows that could shake the country.
