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Mexico City, Mexico — Mexico’s central bank on Thursday reduced its benchmark interest rate for the fifth time since March, saying US President-elect Donald Trump’s tariff threat was clouding the inflation outlook.
Another record session Friday on Wall Street crowned a sixth weekly gain in a row, but failed to carry over into Monday and inspire a similar rally elsewhere.
The one-year Loan Prime Rate (LPR), which constitutes the benchmark for the most advantageous rates lenders can offer to businesses and households, was cut from 3.35 percent to 3.1.
The governing board’s decision to lower the key rate by 0.25 percentage points to 10.00 percent was unanimous, the Bank of Mexico said in a statement.
Article continues after this advertisementA cooling of inflation blamed on the Covid pandemic and the Ukraine war has allowed the central bank to gradually lower its benchmark rate this year from a high of 11.25 percent.
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Annual inflation in Latin America’s second-largest economy fell to 4.55 percent in November, from 4.76 percent in October, the statement noted.
Article continues after this advertisementWhile price pressures were expected to ease further, “the possibility that tariffs on US imports from Mexico are implemented has added uncertainty to the forecasts,” the statement said.
Article continues after this advertisement“That scenario could imply pressures on inflation,” it added.
Article continues after this advertisementTrump has threatened to impose 25 percent tariffs on imports from Mexico unless it halts the flow of fentanyl and migrants.
Despite the uncertainty, the central bank signaled that more — and potentially larger — interest rate cuts were likely.
free online casino no deposit Article continues after this advertisementThe governing board “expects that the inflationary environment will allow further reference rate reductions. In view of the progress on disinflation, larger downward adjustments could be considered in some meetings, albeit maintaining a restrictive stance,” it said.
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