Mexico's central bank anticipates continued market uncertainty

MEXICO CITY, July 5 (Xinhua) -- The uncertainty over Mexico's local markets and the peso will persist for some months, Mexico's central bank Banxico said on Thursday.

Banxico said the complex global environment has led to the situation. The uncertainty caused by the renegotiation of the North American Free Trade Agreement is also a factor. And this environment of uncertainty will persist for the next few months.

The central bank had raised the interest reference rate to 7.75 percent from 7.50 percent on June 21 due to the deteriorating outlook for local market inflation.

It said among the potential risks of the interest rate rise is the possibility that the peso could remain under pressure and the dollar could continue to be strong.

The central bank held a meeting to discuss the situation and most participants agreed that the risk of a slower pace of inflation toward a 3-percent target had increased.

"The majority agreed that the balance of risks with respect to the expected trajectory has worsened since the last monetary policy decision (on May 17), and remains on an upward direction in an environment of marked uncertainty," according to the minutes of the meeting.

According to the National Institute of Statistics and Geography, year-on-year inflation stood at 4.54 percent till the first half of June.

[ Editor: WPY ]
 

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