Mexico: Perseverance

Spain – Mexico

Governor Agustín Carstens has postponed his departure and will continue to lead Banxico until the end of November.

The Central Bank tightened monetary policy in early February, raising its official interest rate by 50 basis points to 6,25%. The economy is facing a surge in headline inflation, which is already above the target range of 3% +/- 1 percentage point, fueled by rising energy prices. Consumer prices jumped 4,7% year-on-year during the first two weeks of February, following a 1,5% month-on-month increase and a 4,7% year-on-year increase in January, and a 0,3% month-on-month increase and a 3,4% year-on-year increase in December. In response to the MXN's 11% depreciation since November, Banxico announced the implementation of a forex hedging program of up to US$20.000 billion, reserved for Mexican banks, to support the local currency in the foreign exchange market. Meanwhile, real GDP grew by +0,7% quarter-on-quarter and +2,4% year-on-year in Q4 2016, exceeding preliminary estimates. Therefore, annual GDP increased by +2,3% in 2016, close to the average of +2,4% recorded in the previous decade.

Source: Solunion

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