Banco de México maintains the interest rate unchanged at 11.25% for the fifth time

He Bank of Mexico (Banxico) remained unchanged this Thursday, for the fifth consecutive time, the interest rate at 11.25%, the highest level in its history, announcing that it will still have to keep it that way “for a certain time”.

In its announcement, which was within market expectations, the central bank “recognized that the disinflationary process has advanced in the country,” so it improved its inflation forecasts for 2023, but “He believed that the panorama continues to involve challenges”.

The decision to maintain the brake on increases, which began during the covid-19 pandemic in June 2021 and accumulated 725 basis points, was approved unanimously and occurred in harmony with the United States Federal Reserve (Fed), which Last week it kept the rate in a range of 5.2% to the 5.5%.

The resolution occurs after it was disseminated hours before that general inflation fell in October to 4.2%its lowest level since February 2021, after registering an index of 7.8% in December, its highest rate for a year-end so far this century.

“Since the last monetary policy meeting, annual headline and core inflation continued to decline. However, both remained high, standing in October at 4.2% and 5.5%respectively”argued the bank’s Board of Governors.

Banxico reduced its forecast for general inflation, now estimating that it will average 4.4% annual in the last quarter of 2023, from a previous projection of 4.7%.

While he maintained his expectation for the end of 2024, when inflation would average a 3.4%. The central bank noted that “Although the outlook is still perceived as complicated, progress has been made in the disinflationary process.”

Even so, “considers that, to achieve the orderly and sustained convergence of general inflation to the inflation target 3%it will be necessary to maintain the reference rate at its current level for some time.”

As upward risks, he stated the persistence of underlying inflation at high levels, exchange rate depreciation, greater cost pressures, the economy showing greater resilience than expected, and pressures on energy or agricultural prices.

“It is considered that the balance of risks with respect to the expected path of inflation in the forecast horizon remains biased upwards”, he warned. The next monetary policy decision, the last of the year, will be on December 14.