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Thursday, June 9, 2011

Lesson in Mexico's Monetary Policy: Part 1

Banco de Mexico (the central bank -- Banxico) is the autonomous authority on monetary policy. The central bank has the primary objective of maintaining stability in the purchasing power of the peso. The value of the peso is determined by the market through a floating exchange-rate regime.

The central bank monitors price levels, and the economic variables that influence prices, in determining monetary policy. It also monitors the exchange rate, differences between observed and projected inflation, inflation expectations, revisions on collective employment contracts, producer prices, and the balances of the current and capital accounts.

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