The Mexican central bank is suffering from a financial illness like never before. Initial diagnosis points to a very weak economic health that forced it to trim down its borrowing interests by a quarter, forcing two officials to vote for immediate actions to suppress the pain.
Banco de Mexico's board of directors spearheaded by Gov. Alejandro Diaz de Leon, reduced their standard rate to 7.75 percent, as estimated by 22 of the 25 market analysts polled by Bloomberg after the bank reduced the rates for the first time in five years.
The federal bank's directors disclosed that the dangers for the government's monetary condition remain hinged on slower than predicted advance after the country narrowly extricated itself from economic collapse middle of this year.
However, financial regulators said that the economic forecast is not that easy to calculate. The bank's officials stopped short of making public an easing system, stating it will concentrate on the peso's effect on overall inflation, economic immobility and cost burdens.
According to Bloomberg Economics market analyst Felipe Hernandez, the company's vote will support predictions for financial lawmakers to continue reducing interest rates. However, continuing doubts regarding risks to market inflation suggest that many of directors "would remain inclined for reductions of only 25 basis points."
It was the first split 3 to 2 vote for Mexico's premier bank since 2014, when only one of its current executives, Javier Guzman, was still part of the board. The split debate is seen to tackle the pace of easing in upcoming decisions, Alonso Cervera, chief economist at Credit Suisse Group, said.
Rules governing finance matters and decisions remain restrictive following Thursday's rate reduction, with significate rate not fully detached from BDM's recent ten-year gains. With a rate of over 5 percent, the country still keeps the second-biggest real interest level among the biggest economies in the world, next only to crisis-wracked Argentina.
On September 2, Carrillo spoke during an unveiling event of the country's latest 200-peso denomination in Mexico City. It is the bank's new generation of bills with improved security features as it honors the country's historical identity and natural heritage.
Meanwhile, prices of basic commodities inched almost 2.98 percent in the first weeks of the month, the lowest in three years and just under Banco de Mexico's 4 percent target. In currencies, the peso kept its downward trajectory after the decision, falling 0.5 percent to 19.648 per US dollar.
BDM slashed its core interest rate for a second time this year as futures investors brace for another round of 25-point reduction in the US by end of 2019. The country joins the list of federal banks in the Latin American region, from Chile to Brazil, that have implemented major cuts in borrowing costs.
