Banxico, the Mexican central bank, raised its key interest rates to 11.25%. The rise of a quarter of a point - the 15th consecutive increase for the Mexican authorities - marks a significant change compared to the many previous actions.
After jumping 0.75% between June and November 2022, they then increased by 0.5%. This increase of only 0.25% thus marks a further slowdown and the probable end of a cycle.
Unlike previous Banxico actions, it has not been accompanied by announcements of further monetary tightening, with authorities limiting themselves to communicating that future movements will depend on the evolution of economic indicators. Therefore, this 11.25% will likely be the pivot for Mexican rates, which seems logical since, at the same time, inflation continues to decline, at 7.6% in February, against 7.9% in January.
Offering very positive actual interest rates (after inflation), Mexico is demonstrating a responsible monetary policy, very appreciated by investors, which explains the peso's good performance on the foreign exchange market. As a result, the Mexican currency has appreciated by 5% against the euro since the beginning of the year and by 12% over one year.
Integrating the USMCA, and the North American Free Trade Agreement, the country is also well-placed to benefit from the amounts invested by States-United in the energy transition and the fact that many American companies are looking for production sites to reduce their dependence on China.
Mexico should therefore benefit from a good situation in the coming years. Accordingly, we continue to invest in them as part of our portfolio.