LatinNews Daily - 31 March 2023

In brief: Mexico’s Banxico slows pace of interest rate hikes

* Mexico’s central bank (Banxico) has raised its benchmark interest rate by 25 basis points to 11.25%. The bank has now hiked the rate by 725 basis points since the current raising cycle began in June 2021. However, this latest increase represents a slowdown from previous rate hikes, following increases of 50 basis points in February and December, and of 75 in November. Additionally, Banxico’s statement did not explicitly mention the possibility of future upward adjustments to the interest rate as it had following previous monetary policy announcements. Banxico noted that, since its last monetary policy meeting, headline annual inflation had “decreased more than predicted”, while core inflation had also “gradually adjusted downwards”. According to the bank, annual inflation stood at 7.12% in the first two weeks of March, down from 7.76% in the first two weeks of February. In its statement, Banxico said that “with this action, the pace of interest rate increases slows and the monetary policy stance adjusts to the trajectory required for inflation to converge to its 3% target within the forecast horizon.”

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