Exclusive: High rates help Mexico weather NAFTA talks, premature to talk of cuts – Carstens

07/13/2017 Reuters

Agustin_Carstens
Carstens

MEXICO CITY (Reuters) – Mexico’s central bank could pause monetary policy tightening for some time, its governor said on Thursday, but he defended high interest rates at a time of political volatility and knocked down speculation there will be rate cuts before mid-2018.

Banco de Mexico Governor Agustin Carstens said talk among private economists that rates would be reduced early next year diverged from the bank’s view, which was that it would take some time to consolidate inflation toward its 3 percent target.

He also said Mexico’s tight monetary and fiscal policy was good preparation for possible volatility stemming from presidential elections next year and NAFTA negotiations that may start in a few weeks.

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Mexican peso surges to 14-month highs as traders shrug off Trump

7/12/2017 Reuters

pesoMexico’s peso surged on Wednesday to a more than one-year high, bolstered by growing confidence that U.S. President Donald Trump will not pull out of NAFTA, as well as a major oil discovery and dovish comments by U.S. Federal Reserve Chair Janet Yellen.

The Mexican currency MXN=D2 gained about 0.7 percent to 17.781 per dollar, a level not seen since May 2016. It has more than recovered from a plunge after Trump was elected and threatened to impose punitive tariffs on Mexican goods to protect U.S. industry.

Expectations that Trump will not shred the North American Free Trade Agreement have fed demand for the peso and helped make it the top-performing emerging-markets currency this year, with a 17 percent gain. On Wednesday it was 3 percent stronger than just before Trump unexpectedly won the election.

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Mexico annual inflation rises to eight-and-a-half year high in June

07/07/2017 Reuters

banco de mexicoMexico’s annual inflation rate rose to its fastest pace in 8-1/2 years in June, but the increase was less than expected and that could support the view that the central bank may pause after a string of interest rate hikes.

Mexican consumer prices rose 6.31 percent in the year through June MXCPIX=ECI, the national statistics agency said on Friday, above the 6.16 percent rate in May but below a 6.34 percent forecast in a Reuters poll.

It was the highest reading since December 2008.

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Mexico central bank to take cue from Fed moves: minutes

7/6/2017 Reuters 

pesoThe majority of Mexico’s central bank board believes it is crucial to maintain the nation’s relative monetary policy stance with the United States now that the Federal Reserve has begun raising rates, according to minutes of the bank’s June 22 meeting released on Thursday.

“Most members said that given the recent interest rate increase by the Federal Reserve, it is indispensable right now to maintain the current relative position,” the statement said.

Nonetheless, most members also said there could be a pause in the bank’s rate hike cycle, considering that consumer price movements appear to be helping inflation reach the bank’s 3 percent target.

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Mexico Rate Cuts: Market’s Wrong If Peso Cooperates, BNP Says

06/28/2017 Barron’s

pesoMexico’s central bank raised its benchmark interest by 25 basis points last week, and many economists think Banxico’s hike last week was the last and that the benchmark interest rate will hover at 7%.

But BNP Paribas, which has been bullish on the Mexican peso, disagrees. The Mexican peso has rallied to fresh highs this week, has strengthened by 16% against the U.S. dollar this year. Marcelo Carvalho, head of emerging market research, and Felipe Klein, an economist, “pencil in steady 25-basis-point cuts at each of the eight regular policy meetings during the course of 2018.”

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Mexican economy grows 0.1 percent in April from March

06/26/2017 Reuters

pesomexicanoMexico’s economy picked up slightly in April from the prior month as an expansion in services offset a slump in industrial output.

The economy grew 0.1 percent in April from March, the national statistics agency said on Monday, after posting two negative monthly readings in a row.

Services grew 0.5 percent, month-on-month, compared to a 0.3 percent decline in industrial output and a 0.9 percent drop in agricultural production, the data showed.

Mexico’s economy is seen growing around 2 percent this year by the government and analysts after data showed no major impact during the first quarter from the cloud of uncertainty over U.S. trade policy under President Donald Trump.

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Mexico central bank hikes interest rate, hints it’s done

6/22/2017 Reuters

The Bank of Mexico logo is seen on the facade of an office building in downtown Mexico City
The Bank of Mexico logo is seen on the facade of an office building in downtown Mexico City, Mexico, June 22, 2017. REUTERS/Edgard Garrido

Mexico’s central bank board made a divided decision to raise interest rates on Thursday and policymakers suggested that they may have raised borrowing costs enough to contain a spike in inflation.

Banco de Mexico raised its benchmark rate MXCBIR=ECI by a quarter percentage point to 7.00 percent, as expected by all 17 analysts surveyed by Reuters last week. One member voted to hold rates, the bank said in a statement.

The central bank has now raised its main interest rate in the last seven meetings. The rate has reached the highest level since early 2009, with inflation at more than an eight-year high.

Policymakers said in their statement that with Thursday’s hike “the reference rate has reached a level that is consistent with the process of efficient convergence of inflation to the 3 percent target,” though they said they would be vigilant.

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