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Mexico & Nafta - July 2017 (ISSN 1741-444X)

End of tightening monetary policy in sight?

“Markets are starting to predict that interest rates will start to fall by the end of the year or by the start of next year, and I believe they are right”. This is how Mexico’s finance minister, José Antonio Meade Kuribreña, recently responded to questions about potential changes to the broadly contractionary monetary policy that has been pursued by the central bank (Banxico) since the start of the year. This policy stance has been marked by the persistent increase in Banxico’s benchmark interest rates in a bid to control the national inflation rate, which has been running above Banxico’s target rate. But economists fret that the high interest rates are weighing down on domestic economic activity and holding back GDP growth this year.

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