MEXICO CITY — Mexico’s central bank decided Thursday to lower its prime interest rate by a half-point to 4.5% amid a sharp economic downturn and rising inflation due to the coronavirus pandemic.

The Bank of Mexico said inflation rose to 3.62% in July. At that level, government 28-day treasury certificates now yield less than 1% in real terms, the lowest yield in years on such Mexican securities.

The bank noted that while inflation is running above the government’s 3% target, it said it should return to near-target levels in one to two years.

Mexico’s economic activity plummeted 18.9% in the second quarter compared to the same period last year.

The Associated Press

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