Mexico Central Bank Deputy Sees Room for More Interest-Rate Cuts
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A Mexican central bank board member on Tuesday said that he sees room for more interest-rate cuts in the future after the first reduction in five years earlier this month.
With Mexico’s key interest rate at 8%, Banco de Mexico has room to relax monetary policy without completely unwinding its restrictive stance, Jonathan Heath said Tuesday in a presentation in Mexico City. Heath was named to the board by leftist President Andres Manuel Lopez Obrador last year.
Mexico reduced borrowing costs by a quarter point from a decade high 8.25% on Aug. 15 after inflation slowed, the economy faltered and the U.S. cut its own rate. Analysts in a survey published by Citigroup Inc.’s Mexico unit last week expect the five-member board to cut again in its next scheduled decision on Sept. 26.
“In my very personal opinion, I believe we now have the opportunity to start to relax the monetary position,” Heath said at an event in Mexico City. “I’m not thinking about abandoning a restrictive stance, but rather making it less restrictive.”
This process could happen very soon, or in the coming months, depending on the data that emerges, he added.
The board is also scheduled to release its quarterly inflation report Wednesday, when Governor Alejandro Diaz de Leon has said the bank will update its projections for growth and inflation. The annual inflation rate slowed to 3.29% in early August. The central bank targets inflation at 3%
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