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Mexican central bank board: upside risks to inflation complicate monetary policy

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Mexican central bank board: upside risks to inflation complicate monetary policy

Board members at Banco de México said that economic and price uncertainty and upside inflation risks contribute to a complex monetary policy situation for the country, minutes from its latest monetary policy meeting showed.

The Mexican central bank agreed unanimously to increase the interest rate by 25 basis points to 8.25% in December 2018.

Although annual inflation has eased in November to 4.72% from 4.90% in October, it is still higher than the 3% target which the central bank has set as their medium and long-term target, according to the minutes.

Both international and national factors led the four members of the board to agree on the hike in an effort to "respond prudently" to a context of slower economic growth and higher uncertainty

The board members expressed a generally cautious stance on monetary policy, and said they would "follow closely the potential pass-through of exchange rate fluctuations to prices, the monetary policy stance relative to that of the U.S. under an adverse external environment, and the conditions of slack in the Mexican economy" to achieve the convergence of inflation to its 3% target.