(Bloomberg) -- Banxico Deputy Governor Omar Mejia said he sees room to adjust the Mexican central bank’s reference rate ahead of its next meeting on March 21.

The country’s balance of inflation risks is “less deteriorated,” according to Mejia, so there is room to change the central bank’s rate. 

“We must be careful not to adopt an excessively restrictive monetary stance, which is why I believe it is pertinent to also make adjustments in this sense,” the deputy governor told a podcast organized by Grupo Financiero Banorte SAB released Wednesday. “The challenge going forward is to adjust the monetary stance in such a way that it is consistent with inflation that, although still above the target, is already on a downward trajectory.” 

Consumer prices rose 4.4% in February from a year earlier, the first slowdown in the headline reading since October. Core inflation, which excludes volatile items such as fuel and food, eased to 4.64% from a year ago. 

Despite significant progress in the disinflationary process as well as on the balance of risks, Mejia said the central bank still has a long way to go to reach its 3% inflation target. Even with downward adjustments in the interest rate, Banxico would continue to have a restrictive stance, which is necessary to rein in price pressures, he added.

Policymakers led by Governor Victoria Rodriguez have previously said that “advances” in their inflation outlook are allowing them to study rate cuts. Banxico, as Mexico’s central bank is known, is the only major inflation-targeting institution in Latin America that has kept borrowing costs steady following a post-pandemic tightening cycle. 

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