MEXICO CITY, Nov 9 (Reuters) - The Mexican central bank is expected to cut its benchmark interest rate later this week as the economy continues to slump and inflation keeps running above the bank’s target, a Reuters poll of analysts showed on Monday.
In the survey, 13 of 22 analysts consulted predicted the central bank will trim the interbank interest rate by 25 basis points to 4.00%, which would mark the 12th consecutive rate cut since the bank’s August 2019 meeting.
The other nine analysts expect the central bank, known locally as Banxico, to keep the rate unchanged at its current 4.25%.
“We think the decision is going to be difficult,” Banorte analysts said in a note predicting a rate cut.
Analysts added that the decision would likely split Banxico’s policy makers, with one or two board members expected to vote to keep the rate at 4.25%.
While Mexico’s economy rebounded in the third quarter compared with the second quarter, it has nonetheless contracted 8.6% so far this year, mostly due to pandemic-related disruptions.
Last month, year-on-year inflation accelerated to 4.09%, the highest level in almost a year and a half and exceeding the central bank’s target of 3%, with a one percentage point margin in either direction.
According to the poll’s median prediction, Banxico’s interbank interest rate will likely end the year at 4% and remain there until the second quarter of 2022, when it is seen rising by 25 basis points.
The Banco de Mexico will publish its monetary policy decision on Thursday at 1:00 p.m. local time (1900 GMT), which will mark its next-to-last monetary policy statement in 2020. (Reporting by Miguel Angel Gutierrez in Mexico City and Gabriel Burin in Buenos Aires; Editing by Dan Grebler)
Our Standards: The Thomson Reuters Trust Principles.