This archive report was first published on 16 August 2019.
On August 15, 2019, the Bank of Mexico made a significant move by lowering its benchmark interest rate to 8%, marking the first rate cut in five years.
The decision was made in response to slowing global economic activity and rising tensions, including the ongoing trade war between the United States and China.
According to the Bank of Mexico, the global economy faces increased risks, citing commercial disputes, the 'disorderly' Brexit process, and deterioration of 'some political and geopolitical risks.'
The bank also expressed concerns over the uncertainty surrounding the U.S.-Mexico relationship and the downgrades to ratings of state oil company Pemex and sovereign debt.
Earlier this week, analyst Alfredo Coutino of Moody's Analytics forecasted 'mildly positive' GDP growth of 0.5% for Mexico this year, but warned that if investors remain cautious, the economy could report no growth or even a mild contraction in 2019.
Despite the rate cut, the Mexican peso closed up 0.33% against the U.S. dollar on the same day.
