MEXICO: RATES FALL


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In its first 2020 policy meeting, the Bank of Mexico cut its overnight interest rate from 7.25 percent to 7.
It was the fifth consecutive quarter-point rate cut to come out of the bank’s board of governors’ quarterly meetings.
The cut was the board’s first unanimous decision since May 2019.
The cut was made after inflation jumped from 2.8 percent in December to 3.2 in January, exceeding the bank’s 3-percent target rate.
Inflation slowed overall in 2019 but Mexico’s GDP contracted by 1 percent during the year.
TREND FORECAST: The Mexican government will continue to lower rates as the global economy slows, thus pushing the value of its peso lower. Caught in a period of stagflation – moribund economy and rising inflation – its central bank will have limited lowering power.

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