Bank of Mexico Keeps Interest Rate Steady Amid Post-Election Volatility

The Bank of Mexico decided to keep its benchmark interest rate steady at 11.00%, with a 4-to-1 vote by its governing board. Despite one member advocating for a rate cut, the decision was largely expected due to ongoing post-election market volatility and persistent inflation above the target range.

The Bank of Mexico held its benchmark interest rate steady at 11.00% on Thursday in a divided decision by the bank's five-member governing board, with one member voting for a quarter of percentage cut.

The decision to hold the rate at its current level, where it has remained since a much-anticipated 25 basis-point rate cut in late March, was expected by a majority of analysts polled by Reuters, after post-election market volatility this month. Four bank board members, including Governor Victoria Rodriguez, voted in favor of keeping the rate unchanged, Deputy Governor Omar Mejia voted to lower the rate by 25 basis points to 10.75%.

In a statement, Banxico, as Mexico's central bank is known, said it expects the country's disinflation process to continue, adding that "the board foresees that the inflationary environment may allow for discussing reference rate adjustments." In early May, Banxico also left the rate unchanged as persistent inflation in Latin America's second-largest economy remained above the bank's target range of 3%, plus or minus one percentage point.