Banco de Mexico slashes interest rate by 75 bps to 6¾%

By Richard Connell

New York, March 20 - The Board of Governors of Banco de Mexico cut its one-day interbank overnight funding rate by 75 basis points to 6¾% at its meeting on Friday, according to a news release issued by the bank.

The board of the Mexican central bank noted that the global financial crisis has continued to intensify, negatively affecting the Mexican economy.

The board also pointed out that the fall in demand and employment in the United States has hurt Mexico, as reflected in lower exports, consumption and industrial production.

Regarding inflation, the board pointed out a decrease since December, caused by lower raw material and commodity prices.

Foreseeing a continued economic contraction, the board cut the interest rate to 6¾% with an eye on meeting the inflation target of 3% by the end of 2010.

The board has now cut the rate at three consecutive meetings by a total of 150 basis points, after having made no reductions since 2006.

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