MEXICO CITY (Reuters) -The best scenario for Mexican interest rates would be a "relatively long pause" to wait and see what the U.S. Federal Reserve does, but if inflation does not ease to near 5%, Bank of Mexico would have to act, said Banxico's deputy governor.
Banxico's board decided by a majority at its last policy meeting on June 24 to raise the benchmark interest rate by 25 basis points to 4.25%, saying it was necessary to avoid adverse effects on inflation expectations and citing price formation in the United States.
"The best scenario would be to have a relatively long pause for as long as we could and wait for the Fed to start raising rates to get on the train and do the same," Banxico Deputy Governor Jonathan Heath said in a podcast interview with Grupo Financiero Banorte economists that was posted on Wednesday.
Heath said discussions among Banxico's five-member board at upcoming monetary policy meetings would center around how long the benchmark interest rate could remain on pause, underscoring that the evolution of key indicators such as inflation would be key.
"If inflation doesn't go down to ... closer to 5% for remainder of the year, we're going to have to take action," said Heath.
Mexican consumer prices rose 6.02% in the year through the first half of June, well above Banxico's target of 3% plus or minus one percentage point.