Bank of Mexico

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Bank of Mexico (Banco de México)
BankofMexico.jpg
Founded 1925
Headquarters Mexico City
Key People Governor Guillermo Ortiz Martínez
Products Mexican government debt securities
Website www.banxico.org

The Bank of Mexico (Banco de México) is the country's central bank and is charged with steering monetary policy by setting inflation and interest rate targets, plus maintaining the circulation of Mexico's currency, the Mexican peso. The Bank of Mexico (BofM) recently held its benchmark lending rate steady after seven successive official interest rate cuts because of fears that monetary targets like inflation may be overshooting for 2010.

Background[edit]

The Bank of Mexico was created as the country's sole bank in 1925 and by 1932 all foreign banks operating in the country were required to purchase its shares.[1] In 1982 after a sudden fall in the value of the Mexican peso the Bank of Mexico eased the country's exchange rate controls and two years later BofM was forced to restrict the amount it lent to Mexico's government.[2] In 1994 following another currency crisis the Mexican government granted the BofM full autonomy to better control inflation. In January 2008 the Bank of Mexico adopted the interbank overnight rate as its interest rate target rather than commercial banks' current account balances with the BofM.[3]

Key people[edit]

Bank of Mexico Governor Guillermo Ortiz was appointed to the position in 1998 and was ratified for a second six-year term on 2004.[4] He previously served three years as the country's Secretary of Finance and Public Credit in the government of President Ernesto Zedillo and before that was Secretary of Telecommunications and Transportation.[5] In 2006 Ortiz joined the board of the Bank for International Settlements and in January 2009 was elected its chairman.

Latest news[edit]

The Bank of Mexico at its meeting in late August 2009 held its benchmark overnight lending rate at 4.5 percent and vowed to hold that rate steady while working to bring Mexico's inflation rate down to its targeted 3 percent by the end of 2010.[6] The BofM announced the rate pause in July 2009 after a total of seven consecutive rate cuts slashed the benchmark interest rate rate by a total of 375 basis points between then and January 2009 in the wake of the 2008 financial crisis and Mexico's worst recession since the mid-1990s. The Bank of Mexico now expects the Mexican economy to recover in the second half of 2009.

References[edit]