Key facts
- Mexico's central bank views its monetary policy rate as neutral.
- There is uncertainty regarding the exact position of the neutral interest rate band.
- A recent IEPS tax hike did not produce second-order economic effects.
- Economic weakness is attributed to poor investment and consumption.
Mexico's central bank (CB) has indicated that its current monetary policy rate is positioned firmly within neutral territory. However, Governor Rodríguez acknowledged that there is still uncertainty surrounding the precise location of this neutral band. Separately, Deputy Governor Cuadra stated that the economy's current weakness is a consequence of insufficient investment and consumption. Deputy Governor Mejía's claims appear to diverge from the broader consensus within the central bank. Officials also noted that a recent increase in the IEPS tax did not result in any discernible second-order economic effects.