MEXICO CITY: Mexico’s central bank held its key interest rate steady Thursday in a sign that jitters over US trade ties were easing, with inflation expected to peak soon.
The bank left the rate for Latin America’s second-largest economy at seven percent, it said in a statement.
It has stood at that level since June when it saw the latest in a series of hikes.
The bank had been under pressure to keep pace with rate rises in the United States and to rein in inflation, which has been partly driven by a weakened peso.
That was a lingering effect of US President Donald Trump’s tough talk on overhauling trade ties.
US, Mexican and Canadian officials are scheduled to start talks in Washington next week on renegotiating the North American Free Trade Agreement at Trump’s demand.
Mexico’s central bank has forecast that inflation will start to ease later this year.
“The Mexican economy and financial markets have shown resilience in the face of the shocks they have experienced,” the bank said in its statement.
It said its string of rises had brought Mexican rates into line with US ones, lowering the risk of investment fleeing to Mexico’s northern neighbor.
Mexico’s economy also performed more strongly than expected in the second quarter, it added.
Official data on Wednesday showed Mexico’s inflation rate hit a new eight-year high in July.
But analysts at consultancy Capital Economics forecast that it will peak this month and decline over the second half of the year. AFP