Bank of Mexico: No Interest Rate Change as Expected

September 5, 2014

Mexico’s record low key central bank interest rate, which has been at 3.0% since a 50-basis point cut in June, increasingly looks like the trough of a downtrend that began from 8.25% at the end of 2008.  The rate was cut by 375 basis points during the first seven months of 2009, paused at 4.5% for the next 44 months, then cut three times during 2013 for a total of 100 basis points and finally sliced to 3.0% from 3.5% in June of this year.

Mexico’s economy is now performing better, and the peso is sufficiently stable.  A rise in U.S. rates will be a cue for Mexican rates to start climbing, but that is unlikely to occur until near mid-2015.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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