Bank of Mexico Leaves Interest Rates Unchanged

By Anthony Harrup

MEXICO CITY--The Bank of Mexico kept its benchmark interest rate unchanged Thursday, saying it expects inflation to take longer to return to its target.

The central bank's board of governors voted unanimously to leave the overnight interest-rate target at 11%, pausing after lowering the rate by a quarter percentage point at its previous meeting in March.

"Challenges and risks prevail, which requires monetary policy to continue being managed prudently," the central bank said. The bank raised its inflation forecasts for the next six quarters, and said it foresees inflation returning to its 3% target in the fourth quarter of 2025. Previously, it had predicted reaching the target in the second quarter of next year.

Inflation rose in April to 4.65% from 4.42% in March, led by higher fresh food prices. Core inflation, which strips out energy and agricultural products, eased to 4.37% from 4.55%.

The Bank of Mexico said risks to its inflation forecasts remain biased to the upside, and that it will assess the inflationary outlook in discussing future interest-rate decisions.

The Bank of Mexico was the last of the main Latin American central banks to start lowering interest rates as inflation receded from 2022 highs, and had warned since last year that a continuous series of interest-rate cuts would be unlikely.

Delays in cutting rates by the Federal Reserve have added to views that Mexico's monetary easing will be slower than previously thought. Economists surveyed last month by the Bank of Mexico expect the reference rate to end this year at 10%, compared with 9.5% in the March survey.

Write to Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

May 09, 2024 15:42 ET (19:42 GMT)

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