MEXICO CITY – Mexico’s central bank yesterday reduced its key interest rate to 4.0%, resuming monetary stimulus aimed at reinvigorating the pandemic-hit economy, the second-largest in Latin America.
The Bank of Mexico lowered the interbank rate by 25 basis points, the first such cut since last September, it said in a statement.
“Economic activity in Mexico improved in the fourth quarter at a slightly quicker pace than expected, although it remains below pre-pandemic levels in an environment of uncertainty and downside risks.”
Potential dangers to the global economy include any increase in coronavirus infections or delays in the distribution of vaccines, said the central bank.
Rising inflation prompted the lender to leave its benchmark interest rate unchanged since September, after more than a year of cuts.
Mexico’s economy shrank 8.5% last year, according to a preliminary official estimate, in what analysts said is the worst slump since the Great Depression.
The economy extended a rebound in the final quarter of 2020, rising 3.1%, after increasing 12% in the third quarter.
Mexico City and a number of other states are on maximum alert because of Covid-19, and most non-essential activities have been suspended.
The country has one of the world’s highest official death tolls from the pandemic at around 170,000, along with nearly two million infections. – AFP, February 12, 2021
