Mexico's central bank, Banxico, will begin purchasing short-term government debt instruments starting in August, introducing a new mechanism to manage liquidity in the domestic money market.
The program allows the bank to buy Cetes and Bondes F, providing a direct channel to inject funds and stabilize short-term interest rates when market conditions tighten.
50%, a stance that signals borrowing costs are likely to remain elevated for the foreseeable future.
The move complements Banxico's recent decision to hold its benchmark interest rate steady at 6.50%, a stance that signals borrowing costs are likely to remain elevated for the foreseeable future.
By adding a bond-buyback facility to its toolkit, the central bank aims to smooth out volatility in the overnight funding market without altering its broader monetary policy stance.
This approach mirrors liquidity management techniques used by other major central banks to prevent disruptive spikes in short-term rates.
The introduction of the buyback program arrives as Banxico seeks to balance inflation control with financial stability.