Last review date: November, 2024
Monetary Policy
Since 1994, Mexico’s central bank, Banco de México (Banxico) has been autonomous in defining and implementing the county’s monetary policy. Monetary policy decisions taken by Banco de México are aimed on guaranteeing the purchase power of the Mexican peso, based on inflation control and exchange rate monitoring.
The monetary policy implemented by Banco de México has created favorable conditions for sustained economic growth, reaching stable and significantly low inflation levels. According to INEGI, in October 2024 the inflation rate is 4.76%.
Likewise, as of November 2024, Mexico has accumulated international reserves of over USD 226 billion, which allows it to face the volatility of the international environment.[1]
[1] Banco de México.
Based on the ARA (Assessing Reserve Adequacy) indicator of the International Monetary Fund (IMF), which determines the foreign exchange liquidity needs of any country, Mexico is placed in an adequate level to support its balance of international payments, while preserving financial and economic stability in the presence of external negative shocks. The IMF considers that reserves within 100-150 percent of the ARA metric are adequate.
Furthermore, the International Monetary Fund, has acknowledged the Mexican economy soundness, and in November 2023 ratified the flexible credit line extended to Mexico of USD 35 billion.
As a consequence, México has funds of over USD 261 billion to face any volatile environment with more strength.
Banco de México carries out its monetary policy by establishing a target rate for one day bank lending transactions. The conditions under which Banco de México provides or withdraws such liquidity ensures the compliance with the objective established for one day interbank lending rate.
