Banco de México trims interest rate again

Jun. 26, 2020 8:04 AM ETEWW, MXE, MXF, HEWW, MEXX, FLMXBy: Liz Kiesche, SA News Editor
  • Mexico's central bank cuts its key interest rate by 50 basis points to 5% in response to the economic contraction caused by measures taken to slow the spread of COVID-19.
  • Since March 21, the Banco de México has cut the interest rate by 200 basis points.
  • The Mexican peso falls 0.6% against the U.S. dollar; YTD, it's down 17% vs. the greenback.
  • The bank observes that several organizations and analysts have cut their economic projections for 2020 and now see a recovery in 2021. "These expectations are subject to a high degree of uncertainty," the bank said in a statement.
  • Annual headline inflation rose from 2.15% to 3.17% between April and the first two weeks of June.
  • "The Governing Board will take the necessary actions on the basis of incoming information and considering the large impact on productive activity as well as the evolution of the financial shock that we are currently facing, so that the policy rate is consistent with the orderly and sustained convergence of headline inflation to Banco de México’s target within the time frame in which monetary policy operates," it said.

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