Banco de Mexico leaves one-day interbank overnight funding rate unchanged at 7.5%

By Laura Lutz

Des Moines, April 18 - Banco de Mexico said its board of governors decided to keep its target for the one-day interbank overnight funding rate at 7.5%, saying that Mexico has experienced less inflation than many other countries despite rising inflationary pressures.

Recent inflation in the country, both general and underlying, has been within the bank's predictions from last year, but the increase in prices of food and raw materials in the first months of 2008 have been greater than predicted.

As a result, the bank said it expected higher levels of inflation in the coming months and revised its projections for its next report on inflation.

The announcement said that the global economy is weak and that most analysts agree that the U.S. economy is in recession.

It also noted that inflationary pressures around the world have continued to intensify, driven by increases in the price of food and energy.

The Mexican economy slowed in the final trimester of 2007, the bank noted, but the preliminary information for the first trimester of this year suggests that it is improving. It cautioned, though, that the risks of decreased growth in the rest of the year have increased.

The bank said it will continue to monitor the situation, focusing on prices, inflationary pressures from the global economy, economic slowdown in Mexico and credit tightening caused by the worldwide financial turbulence.

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