The Central Bank of Mexico unexpectedly lowered the key rate to 10.75%

The Bank of Mexico unexpectedly lowered its base interest rate by 0.25 percentage points, setting it at 10.75% per annum, despite the acceleration of inflation in the country. 

Analysts from Moody's Analytics expected the rate to remain unchanged and were surprised by this decision, considering it «not in line with inflationary conditions.»

In July, inflation in Mexico rose to 5.57%, compared with 4.98% in June, with a target level of 3%. The central bank attributed the rate cut to the risks of a slowdown in economic activity, stressing that the acceleration of inflation is observed in volatile categories such as energy and food.

Since the beginning of the year, the exchange rate of the Mexican peso against the US dollar has decreased by 11%. However, on Friday, the peso strengthened by 0.2%, reaching 18.8369 per dollar.