Mexico: Selected Issues

November 22, 2016

Preview Citation

Format: Chicago

Mexico: Selected Issues, (USA: International Monetary Fund, 2016) accessed December 26, 2024

Summary

This Selected Issues paper analyzes transmission of monetary policy rates to lending and deposit rates in Mexico. The results show that transmission of the policy rate to market rates is statistically significant in all cases, except for mortgage rates. For sight deposits, pass-through is low, with a 1 percentage point increase in the policy rate leading to a 0.2 percentage point rise in the deposit rate. For term deposits the pass-through is stronger, but remains below unity at 0.7. The pass-through to both lending and deposit rates is very rapid. The dynamic specifications show that pass-through is significant in either the current or the following month, and the long-term impact is achieved during the second month.

Subject: Central bank policy rate, Deposit rates, Financial institutions, Financial regulation and supervision, Financial services, Hedging, Oil prices, Options, Prices

Keywords: Central bank policy rate, Core inflation, CR, Deposit rates, Differenced interest rates, Global, Headline inflation, Hedging, ISCR, Monetary policy, Mortgage rate, Oil price persistence, Oil prices, Oil-price process, Oil-price shock, Oil-price volatility, Open economy, Options, Phillips curve, Price bond, Price differential, Strike price, Target rate, Term deposit rate

Publication Details

Pages:

37
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2016/360
Stock No:

1MEXEA2016003
ISBN:

9781475556032
ISSN:

1934-7685

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