Mexico - June 2020

Interest rate cut: On 14 May the governing committee of Mexico’s central bank (Banxico) decided to cut the benchmark interest rate by 50 basis points to 5.5%, in a further effort to address the economic fallout of the coronavirus (Covid-19) pandemic. In a statement, Banxico justified the decision on the basis of the shock in financial markets; the “unprecedented” revision of its domestic economic outlook, “which incorporates a significant fall in economic activity” in the first quarter of 2020; and inflation, citing a drop in annual inflation between March and April from 3.25% to 2.15%, which was influenced significantly by a fall in oil prices. This marks Banxico’s third such interest rate cut since February 2020.

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