Bank of Mexico holds interest rate at 11.25% citing 'complex' inflation

The Bank of Mexico maintained its benchmark interest rate at 11.25% on Thursday, in line with analysts' forecasts, underscoring that the inflationary outlook remains "very complex" and suggesting the rate could hold steady for a while. The unanimous decision by the central bank's five-member board is the third consecutive rate hold since Banxico, as the Bank of Mexico is known, halted a two-year hiking cycle in May as inflation has waned from last year's two-decade high.

The Bank of Mexico maintained its benchmark interest rate at 11.25% on Thursday, in line with analysts' forecasts, underscoring that the inflationary outlook remains "very complex" and suggesting the rate could hold steady for a while.

The unanimous decision by the central bank's five-member board is the third consecutive rate hold since Banxico, as the Bank of Mexico is known, halted a two-year hiking cycle in May as inflation has waned from last year's two-decade high. Annual inflation slowed for the sixth consecutive month in July, official data showed on Wednesday, landing at 4.79%, but remained above the central bank's target of target of 3%, plus or minus a percentage point.

In a statement on Thursday, Banxico maintained a previous forecast that it expects inflation to converge to the 3% target in the fourth quarter of this year. Banxico said the inflationary outlook will be complicated and uncertain throughout the entire forecast horizon, with upward risks.

"Thus, in order to achieve an orderly and sustained convergence of headline inflation to the 3% target, it considers that it will be necessary to maintain the reference rate at its current level for an extended period," the bank said.

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