Banxico and monetary policy: what is fiscal domination about?

Fiscal dominance refers to the process by which central banks deviate from their objective of supporting the state of the Public finances.

Last December, in the minutes relating to the monetary policy decision of the Bank of Mexico (Banxico) in which the reference rate was increased by 50 basis points, one of the members of the Governing Body expressed concern about the impact that the increase in interest rates on the public spending.

With the reduction of the last monetary policy decision, the interest rate in Mexico stands at 5.50 percent.