Mexican central bank holds rates steady, cites peso rally

3/18/16 Reuters

banco de mexicoMexico’s central bank held borrowing costs steady on Friday, noting that measures taken by financial authorities had helped spur a peso rally.

The Banco de Mexico left its key rate at 3.75 percent, as expected by all 15 analysts surveyed by Reuters this week. In February, the central bank surprised markets with a rate hike aimed at supporting the battered Mexican currency.

The peso has gained about 9 percent since the central bank announced its half-percentage-point hike on Feb. 17 and intervened directly in the foreign exchange market for the first time since 2009.

The central bank said actions by financial authorities had “broken a negative trend in the price of the national currency, which had displayed an overreaction to an adverse external environment” early this year.

A global rally in riskier assets had also helped lift the peso against the U.S. dollar, the central bank said.

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Mexico Central Bank Cuts Growth Forecast as U.S. Industry Stalls

3/3/16 Bloomberg 

Mexico’s central bank cut its 2016 growth forecast for the third time, saying slower U.S. industrial activity will hurt demand for the nation’s goods.

Gross domestic product will increase 2 percent to 3 percent this year, compared with the previous estimate of 2.5 percent to 3.5 percent, the bank said in its quarterly inflation report published Thursday on its website. Inflation will quicken to slightly above the 3 percent target in the second and third quarters before ending 2016 near 3 percent, policy makers said.

The central bank, led by Governor Agustin Carstens, surprised investors on Feb. 17 by raising the nation’s key interest rate half a point to 3.75 percent and introducing discretionary dollar sales in an effort to head off a rise in inflation expectations stemming from a weak peso. Since the measures were announced, the peso has appreciated the most among major currencies from a record low as economists expect the benchmark rate to rise even further this year.

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Mexico annual inflation eases below central bank ceiling

Reuters, 1/9/2013

marketsMexican consumer prices in December dipped below the central bank’s 4 percent tolerance ceiling for the first time in seven months, further diminishing chances of an interest rate rise any time soon. Mexican consumer prices rose 3.57 percent in the year through December, slower than November’s 4.18 percent and below expectations in a Reuters poll for 3.71 percent, the national statistics agency said on Wednesday. Consumer prices picked up 0.23 percent last month, down from the 0.68 percent rate reported in November and below the 0.34 percent expected in a Reuters poll.

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