Mexico Cuts Benchmark Interest Rate from 6% to 5.5%... Lowest Since 2016

[Asia Economy Reporter Jeong Hyunjin] Considering the economic impact of the novel coronavirus disease (COVID-19), Mexico lowered its benchmark interest rate from 6% to 5.5% on the 14th (local time). This is the lowest level since 2016.

According to Bloomberg News and others, the Bank of Mexico (Banxico) held a monetary policy meeting on the day and unanimously decided to cut the benchmark interest rate by 0.5 percentage points. This marks the eighth consecutive rate cut, bringing the rate to its lowest level since December 2016. Banxico had previously implemented surprise rate cuts in March and April, taking into account the COVID-19 pandemic and the decline in oil prices.

In a statement, Banxico said, "The scale and duration of the impact of the COVID-19 pandemic remain unknown, but its effects will increase further in the second quarter," and forecasted that "employment will also contract significantly." Mexico's gross domestic product (GDP) in the first quarter of this year already decreased by 1.6% compared to the previous quarter and by 2.4% compared to the same period last year. More than 550,000 jobs disappeared last month alone.

Earlier, the International Monetary Fund (IMF) projected Mexico's economic growth rate this year to be -6.6%, and international private investment banks expect it could fall as much as -12% in the worst-case scenario.

This content was produced with the assistance of AI translation services.