Incoming Mexican government has little room for error: adviser

11/16/2018 – Reuters

REUTERS/Henry Romero

NEW YORK (Reuters) – An adviser to Mexican president-elect Andres Manuel Lopez Obrador sought on Thursday to reassure investors in New York, following weeks of upheaval in Mexican financial markets and doubts about the policies of the incoming left-leaning government.

Abel Hibert, an economic adviser to Lopez Obrador, acknowledged that financial markets were watching closely.

“We recognize that we have one opportunity to show responsibility in the elaboration of the next budget,” Hibert said to a crowd of investors at a business forum in New York.

“The design of the public budget will be very careful,” he said. “We don’t have room for mistakes.”

Markets were shook in recent weeks by announcements from the incoming administration that it would cancel a partly-built $13 billion Mexico City airport and limit bank commissions.

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Mexico central bank sends warning over incoming leftist government

11/16/2018 – Reuters

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MEXICO CITY (Reuters) – Mexico’s central bank raised its benchmark interest rate on Thursday on concerns over inflation, and said the incoming government’s policies risked fanning inflation in a strongly worded warning to President-elect Andres Manuel Lopez Obrador.

The bank said another rate hike was possible.

The Bank of Mexico lifted its overnight interbank rate MXCBIR=ECI by 25 basis points to a nearly 10-year high of 8.0 percent, as expected by economists. It was a divided decision, with one member calling for a 50-point hike.

Mexico’s peso and the stock market have been rattled by concerns Lopez Obrador’s administration will move away from the orthodox fiscal policies advocated by the central bank.

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Mexico’s President Elect Reaches Out to Business Elite

11/15/2018 – New York Times

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MEXICO CITY — Mexico’s President-elect Andres Manuel Lopez Obrador has reached out to the country’s business elite, announcing the formation of a business advisory council including big names, especially in media.

Lopez Obrador said in a pre-recorded video circulated Thursday that he would meet with the council every couple months.

Lopez Obrador, who takes office Dec. 1, says Mexico needs the private sector’s support to generate jobs and grow the economy.

The leftist politician quickly moved to meet with business leaders to calm markets after his victory in July. Last month, Lopez Obrador roiled markets again by announcing the cancellation of the capital’s $13 billion airport project.

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Mexico Seen Hiking Interest Rate After AMLO Spurs Peso Plunge

11/15/2018 – Bloomberg

By Eric Martin

Mexico’s central bank will raise its key interest rate Thursday after President-elect Andres Manuel Lopez Obrador’s decision to cancel a $13 billion airport sent the peso plunging and raised concerns about policy uncertainty, according to a survey of economists.

Policy makers led by Governor Alejandro Diaz de Leon are projected to lift borrowing costs, already at the highest level in almost a decade, another quarter point to 8 percent, according to the median estimate in a Bloomberg survey. Twenty-one economists see policy makers raising the rate, with six projecting it to remain unchanged.

Analysts began to forecast an increase two weeks ago after AMLO, as the leftist is known, said he would cancel construction of the new Mexico City airport already one third complete, spurring the biggest sell-off in the nation’s assets since 2016. While the central bank kept the rate unchanged last month, the board warned that it will take the actions needed to ensure its price goal is reached, and one of the five members voted for a hike.

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AMLO Shockwaves Spread for Mexico Investors Wary of Policies

11/09/2018 – Bloomberg

By Eric Martin

Mexican President-elect Andres Manuel Lopez Obrador and his allies are quickly showing that they’ll put the people over business interests — even if it risks jarring investors.

The country’s stocks, bonds and currency plunged Thursday after the Senate leader for Lopez Obrador’s Morena Party introduced a bill to eliminate certain fees and commissions charged by banks. While such a move would be welcome in many corners of the country, it came as a surprise to a business community that was already reeling from the president-elect’s decision 11 days ago to scrap a $13 billion airport project.

The politician known as AMLO has always somewhat unnerved investors with his leftist agenda, but the latest actions by him and his party have left them wary of what comes next. After taking smiling photographs with executives in the first four months of his presidential transition, Lopez Obrador in the past two weeks has challenged them like no other leader in recent memory.

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Mexico stocks plunge on ruling party bank commissions plan

11/08/2018 – Reuters

Nov 8 (Reuters) – Mexico’s banking stocks plunged on Thursday, after a Mexican senator from the president-elect’s party released a bill proposal that would prohibit or curb banks from charging commissions for certain services.

Mexico’s S&P/BMV IPC index was down more than 2 percent, with shares in Grupo Financiero Banorte down more than 11 percent. Santander and Gentera both dropped more than 7 percent.

The new shock to markets by the incoming government comes after president-elect Andres Manuel Lopez Obrador announced on Oct. 29 that he would scrap a $13 billion airport project, pummeling stocks and the peso.

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Mexican Inflation Slowed Modestly in October

11/08/2018 – The Wall Street Journal

By Anthony Harrup

MEXICO CITY — Mexico’s consumer-price inflation eased slightly in October as a drop in agricultural prices partially offset higher energy costs, but left the annual rate well above the central bank’s 3% target.

The consumer price index rose 0.52% last month, pushing annual inflation down to 4.9% from 5.02% in September, the National Statistics Institute said Thursday.

Core CPI rose 0.31%, led by a 0.39% increase in services, nudging the annual rate up to 3.73% from 3.67% in September.

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