Mexico’s central bank unexpectedly reduced its key interest rate to a record low after cutting its forecast for 2014 growth.
Banco de Mexico lowered the overnight rate by half a percentage point to 3 percent, surprising all 20 economists surveyed by Bloomberg who had forecast no change. Both the central bank and theFinance Ministry cut their full-year growth forecasts two weeks ago as weak export demand and a tax increase sapped growth.
The central bank reduced its growth forecast for this year on May 21 to between 2.3 percent and 3.3 percent from a previous estimate of 3 percent to 4 percent after the U.S. economy, the biggest buyer of Mexican exports, stalled in the first quarter. President Enrique Pena Nieto has endedMexico’s state monopoly on oil production and encouraged more bank lending to revive growth in Latin America’s second-largest economy after growth missed analysts’ estimates in seven of the past eight quarters.