MEXICO CITY (Reuters) – The Bank of Mexico is expected to hold the country’s benchmark interest rate on Thursday, halting a cycle of rate hikes that began in June 2021, a Reuters poll of analysts showed on Monday.
Twelve of the 15 analysts polled by Reuters see Mexico’s central bank maintaining borrowing costs at the current rate of 11.25%. The three others forecast a 25-basis-point rate hike.
The central bank’s pause would come after Mexico’s annual inflation eased in April for the third consecutive month, after nearly two years of relentless monetary tightening.
“We think the (central bank’s) statement will suggest that this cycle of increases is over,” Grupo Financiero Banorte said in a report.
“With this in mind, our attention will be on the information regarding how long it could stay at the current level and when the cuts will begin,” Banorte added.
Mexico’s central bank hiked the interest rate a quarter of a percentage point in late March, moderating the pace of its tightening cycle and taking a more dovish tone on future rate moves.
Banxico, as the central bank is known, has raised its key interest rate by 725 basis points since June 2021 to combat rising consumer prices.
Annual inflation peaked in August and September at a more than two-decade high of 8.70%, slowing to 6.25% in April, the lowest level since October 2021. Still, that is considerably higher than the central bank’s target of 3%, plus or minus a percentage point.
Banxico will announce its next interest rate decision on Thursday at 1 p.m. local time (1900 GMT).
(Reporting by Noe Torres; Additional reporting by Gabriel Burin in Buenos Aires; Editing by Lisa Shumaker)
