Banco de México raises the interest rate to 10% with a fourth consecutive increase of 75 points

The Board of Governors of Banco de México decided by majority to increase the rate by 75 base points to take it to 10% in its penultimate decision of the year.

The decision made by Banxico was in line with market expectations, which according to the Citibanamex survey, meant a fourth consecutive increase of three quarters of a point in the rate.

In Banxico’s statement they specified that deputy governor Gerardo Esquivel voted in favor of increasing it but to a lesser extent, half a percentage point.

With this decision taken by majority, 12 consecutive increases in revenue were made, since June 2020, making this period the longest upward cycle since the central bank used the strategy of directly setting the target rate, since the year 2008.

In the statement they adjusted “marginally downward” their forecasts for the inflation and in contrast, they moved their forecasts for core inflation “slightly higher”.

Thus, they now project that inflation will end the last quarter of the current year with an annual variation of 8.3%, which is below the 8.6% estimated in the September announcement.

They also “marginally revised down their projections for the first quarter of 2023, which they now anticipate with a variation of 7.6% per year from the previous 7.9%, and left the forecast for the second quarter of 2023 at 5.8%, which is below 6 % estimated by them in September.

The arrival at the specific objective of 3% remained unchanged, at 3.1% for the third quarter of 2024, with a slight upward revision of the fluctuation that they expect in inflation for the period from January to March 2024, which is now at 3.8% from the previous 3.7 percent.

(Developing note)