Capital inflows and benign financial conditions During the last four years, the yield curve in Mexico has successively shifted downward, a process that has continued so far this year, leaving current interest rates for all terms close to or at their all-time lows.
Aside from variations due to changes in risk aversion, the main driving force for these shifts has been almost synchronic shifts in the U.S. yield curve, resulting from the different stages of monetary easing there. The main transmission mechanism for lower interest rates has come from persistent capital inflows.