Banxico upwardly revised inflation view on stubborn services, minutes say
By Brendan O'Boyle
MEXICO CITY, Oct 12 (Reuters) - The Bank of Mexico's governing board said it is necessary to hold its key interest rate for an "extended" period, as board members see services prices keeping inflation higher for longer, minutes from its last monetary policy meeting showed on Thursday.
The five-member board of the Bank of Mexico, known as Banxico, unanimously held its key rate steady at 11.25% for a fourth straight time at its Sept. 27 meeting, whose results were announced a day later.
Banxico's board has repeatedly noted the need to keep rates steady for longer than initially anticipated and at its last meeting pushed back forecasts for headline inflation to converge to target, citing stubborn services inflation, which ticked up in September.
Board members now see inflation reaching the bank's 3% target, plus or minus a percentage point, in the second quarter of 2025.
"Most members highlighted that the adjustment in forecasts is primarily due to the expectation of a greater persistence in the services component, due to the accumulation of costs that have not yet been fully passed on to consumer prices," the minutes said.
Mexico's annual inflation eased in September for the eighth consecutive month and stood at 4.45%, though annual services inflation was 5.23%, up from 5.15% in August, data published this week by Mexico's statistics agency showed.
"Most members considered that the recovery in the demand for services is allowing a greater pass-through of accumulated costs, which would explain the persistence exhibited by this component," the minutes said. (Reporting by Brendan O'Boyle and Anthony Esposito; Writing by Valentine Hilaire; Editing by Chris Reese)
