Interest rate cut: On 15 August Mexico’s central bank (Banxico) reduced its benchmark interest rate to 8% from 8.25%. In a press release Banxico cited as factors that led to its decision: a deteriorating “balance of risks for global economic activity”; and the recent cut in interest rates by the US Federal Reserve and other central banks. Banxico also notes that inflation remained at “reduced levels”, with the annual rate coming in at 3.78% in July and 3.95% in June. This is the first time in over five years that Banxico has cut its benchmark interest rate. The consensus view by economists is that the interest rate cut was adequate, as it could help to boost domestic economic activity without generating any significant inflationary pressures.
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