Mexico Finance Minister Sees Rate Cuts as Early as Year End

6/21/2017 Bloomberg

Mexican Finance Minister Jose Antonio Meade attends a conference marking the International Day of Family Remittances 2017 in Mexico City
Mexican Finance Minister Jose Antonio Meade attends a conference marking the International Day of Family Remittances 2017 in Mexico City, Mexico June 16, 2017. REUTERS/Carlos Jasso

Mexico is probably near the end of its cycle of interest-rate hikes and may be able to lower borrowing costs as early as year end, Finance Minister Jose Antonio Meade said.

The central bank is likely to raise borrowing costs a couple more times, before it starts unwinding that position as inflation slows to less than 4 percent by the end of the year or early 2018, Meade said in an interview Wednesday. Current inflation of more than 6 percent is due to a surge in gasoline prices and a plunge in the peso at the beginning of the year and won’t last, Meade said.

Mexico has raised rates more than any of the other 35 central banks tracked by Bloomberg since the start of last year as concern Donald Trump would end the nation’s trade agreement with the U.S. sent the peso to record lows. Pressure on the central bank is now easing after the currency soared 18 percent since Trump’s inauguration, the best performance in the world, on signs the new U.S. administration will negotiate an accord that benefits both nations.

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