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The Bank of Mexico maintains the interest rate at 7%

The Bank of Mexico (Banxico) announced today that it maintains the overnight interbank interest rate at 7% and assured that it is attentive to risks such as the renegotiation of NAFTA or an increase of inflation, which may condition subsequent decisions.

Mexico, Nov 9 (EFE) .- The Bank of Mexico (Banxico) announced today that it maintains the overnight interbank interest rate at 7% and assured that it is alert to risks such as renegotiation of NAFTA or an increase in inflation, which may condition subsequent decisions.

"The Governing Board has unanimously decided to keep the target for the rate unchanged. of interbank interest to a day at a level of 7.00%, "the issuing institute said in a statement.

The Governing Board of the Bank of Mexico indicated that it will follow" very closely "the evolution of determinants such as inflation and considering "the balance of risks".

Especially "of future changes in the relative monetary position between Mexico and the United States" and of an eventual "potential transfer" of changes in the exchange rate to prices.

"In any case, given the various risks that remain, the board will be vigilant to ensure to maintain a prudent monetary stance, so as to strengthen the anchoring of medium and long-term inflation expectations, "added the text.

Banco de México He stressed that world economic activity expanded in the third quarter, and in the United States, the main trading partner of the Latin American nation, the labor market also strengthens.

Despite these favorable facts, the central bank warned of risks and a "contraction" of the Mexican economy in the third quarter that "contrasts with the dynamism it exhibited in the first half of the year. "

" The slowdown in some components of aggregate demand contributed to this, as did the adverse, albeit temporary, effects caused by earthquakes occurred in September and the significant reduction in oil production in that month, "he said.

The bank considered that the renegotiation of the Free Trade Agreement of North America (NAFTA) influences the situation in the country.

Although not substantially, it has "kept investment at depressed levels and is possibly one of the causes of the deceleration of consumption ".

" Given the complex environment that the Mexican economy is facing, it continues to be especially relevant for the authorities to persevere in maintaining the solidity of the macroeconomic fundamentals of the country, "Banxico said.

He also stressed that the recent depreciation of the peso against the dollar fits within a" context of normalization "of the monetary policy in the United States.

Regarding inflation, the issuing institute assured that it reached its maximum in August 2017 with an annual increase of 6.66%, and it anticipated a progressive decline in consumer prices, so that by the end of 2018 it could approach the 3% target.

This forecast is subject to upward and downward risks, as the talks on NAFTA take place, in effect since 1994 between Mexico, Canada and the United States.

The Governing Board has increased the reference interest rate a total nine times since December 2015, when it rose from 3 to 3.25% as a result of the rise in US rates. this year, and since then it has kept it at 7%.

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