Cut is as expected
Mexico central bank has cut their overnight rate to 5.5% from 6%. The rate decision was unanimous and as expected.
- Conditions of slack and economy continued to widen
- balance of risks to growth is tilted down
- balance of risk to inflation remains uncertain
- challenges for monetary policy posed by pandemic include unprecedented impact on economic activity and those associated with financial shock we are currently facing
- it is unclear how long effects of pandemic will last
- anticipates pandemic impact will deepen in 2nd quarter
- governing board will take required action based on additional information and considering the strong impact on productive activity and the evolution of the financial shock we are now facing
- taking into account risks for inflation, economic activity and financial markets.
- Further or persistent depreciation in peso, possible disruption to supply chain are among upward risks to inflation
- among downward risks to inflation are further widening of output gap, impact of fall in energy prices
