Unexpected Mexican Interest Rate Cut
September 8, 2013
The Bank of Mexico’s benchmark interest rate was cut to 3.75% from 4.0%, a level that had prevailed for the prior half-year. A 50-basis point cut on March 8 had been the first reduction since July 2009. Officials are gambling that this easing will not expose the peso to excessive selling pressure. A statement from monetary officials opines that inflation will settle back to the 3% 2-4% inflation midpoint because of the mounting slack in the economy. GDP contracted nearly 3% at an annualized rate between the first and second quarters and was only 1.5% higher than a year earlier. Mexico’s current account deficit equals roughly 1.5% of GDP
Copyright 2013, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Mexico
ShareThis
