Carstens Reiterates Mexico May Not Have to Wait for Fed Hike

8/28/2015 Bloomberg Business

banco de mexicoMexico central bank Governor Agustin Carstens reiterated that policy makers haven’t ruled out raising interest rates before the U.S. if they sense peso weakness creating conditions that could spur faster inflation.

“We have said that we are not 100 percent locked into the idea that before we move the Fed has to move,” Carstens said in an interview with Bloomberg Radio at the Kansas City Federal Reserve’s annual retreat in Jackson Hole, Wyoming. “We have said that we could move before if we see destabilizing forces in the market or where we see that the exchange rate might be leading to dynamics that eventually could affect inflation. So far we haven’t seen that.”

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A Mexican Standoff: Banxico vs. The Fed

8/6/15 Forbes
5504964078_df874cacb5_zBanxico, the Mexican central bank, is widely expected to raise interest rates alongside the Federal Reserve in the upcoming hiking cycle to avoid further weakness in the Peso (MXN).  There was even speculation that Banxico would preemptively hike during last week’s policy meeting. Policymakers ended up keep rates unchanged at an all-time low of 3.0%, but the central bank did take steps to buoy MXN.

The central bank increased the amount of dollars to be auctioned daily from $52 million to $200 million. They also reduced the amount MXN has to weaken for the central bank to sell an additional $200 million from 1.5% to 1%. MXN reacted immediately to the announcement, jumping 1.2% against USD, which is a notable move for the world’s most traded EM currency.

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Bank of Mexico Held Interest Rates Steady Ahead of Budget Cuts

02/12/05 Wall Street Journal

banco de mexicoThe Bank of Mexico’s five board members voted unanimously last month to keep interest rates unchanged, a day before the government unveiled a series of budget cuts to address the drop in oil prices and expectations of more difficult financing conditions ahead.

The central bank, led by Agustin Carstens, left the overnight lending rate target at 3% for a fifth consecutive meeting Jan. 29.

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Volatility likely in Mexico with rising U.S. rates: Carstens

09/30/14 Reuters

finance-market_dataA gradual rise in interest rates in the United States is likely to generate some market volatility in Mexico, but the fundamentals of Latin America’s no. 2 economy are sound, Mexican central bank governor Agustin Carstens was quoted as saying on Tuesday. “At the end of the day, the increase in interest rates will lead to a readjustment of portfolios, which in this readjustment process could cause volatility,” Carstens told Mexican financial daily El Financiero in an interview. “Certainly we’re going to have a certain amount of volatility, nevertheless … the macroeconomic fundamentals in Mexico are good,” he added.

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Mexico Consumer Prices Rise as Central Bank Cuts Interest Rate

06/24/14 Bloomberg

drawing bar chartMexican consumer prices rose in the first half of June as the central bank unexpectedly cut the nation’s key interest rate.

Prices gained 0.08 percent, compared with the 0.1 percent median forecast of 22 economists surveyed by Bloomberg. The annual inflation rate climbed to 3.71 percent from 3.58 percent two weeks earlier, remaining below the 4 percent upper limit of the bank’s target range.

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Mexico cenbank chief sees no rate hikes for now

Reuters, 1/8/10

Mexico’s new central bank chief said on Friday he would not raise interest rates for now and suggested the finance minister could attend

monetary policy meetings to improve cooperation on the economy.

In his first speech since taking over the central bank at the start of the year, Agustin Carstens said recent hikes in taxes and fuel prices would temporarily boost inflation but would not affect monetary policy decisions unless consumer behavior was substantially altered.

“Although the rise in taxes and fuel prices has created an increase in prices and an expectation of inflation, the effect will be transitory and limited and will fade within a year, which means there will be no need for an adjustment in monetary policy,” Carstens said in a university speech.

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Mexican Senate Committee Approves Bill to Limit Interest Rates

Bloomberg, 4/15/2009

credit-cardsMexico’s Senate finance committee approved a bill that would allow the central bank to limit interest rates and fees that banks can charge.

“Banco de Mexico will ensure that institutions give loans or credit in accessible and reasonable conditions, and it will take corrective measures so that operations are offered under those terms,” the bill says. The initiative will now move to the floor of the Senate.

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