Two cycles of monetary easing in Mexico: 2009 and 2013−2014

Abstract

This paper provides an analysis of two cycles of monetary easing in Mexico. The first took place in 2009, during the global financial crisis, and the second occurred in 2013−2014, when the Mexican economy lost dynamism. In both periods, the actions taken by the Bank of Mexico provide ample evidence of its efforts to stabilize output and employment, while ceding importance to the fight against inflation and, in doing so, adopting a hierarchical mandate. The abundant global liquidity generated in developed countries by the great recession facilitated the monetary flexibilization in Mexico. A revision of official information from the Bank of Mexico in 2009 and 2013−2014 provides data on the cuts made to the reference rate, their periodicity, as well as their quantity. The two cycles of monetary expansion diminished the cost of money with the goal of incentivizing investment and consumption while counteracting the weakness of the Mexican economy.