Mexico holds interest rate steady as inflation rises

MEXICO CITY — Mexico’s central bank left its benchmark interest rate unchanged at 11 percent Thursday after an uptick in inflation, marking a pause after the first cut in three years in March.

“The disinflation process is expected to continue,” but at the same time, “inflationary shocks are foreseen to take longer to dissipate,” the Bank of Mexico said in a statement.

Inflation increased to 4.65 percent on an annual basis in April, up from 4.42 percent in March, driven by rises in prices of gasoline and some foods, official figures showed Thursday.

The central bank raised its inflation forecasts for Latin America’s second-largest economy for the next year and a half.

It now expects inflation to hit the official 3.0 percent target in the fourth quarter of 2025.

“The balance of risks for the trajectory of inflation within the forecast horizon remains biased to the upside,” the central bank said.

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The official lending rate had stood at a record high of 11.25 percent until March, as policymakers sought to cool inflation that hit two-decade highs above eight percent in 2022.