The Mexican central bank's surprise interest rate cut on Thursday is likely...
MEXICO CITY - The Mexican central bank’s surprise interest rate cut on Thursday is likely to have a limited impact at best on lifting growth this year after the sluggish economy narrowly avoided recession in the first half of 2019, analysts say.
“Whatever we do now on the monetary policy front doesn’t work for this year in terms of growth,” said Sergio Kurczyn, a senior economist at bank Citibanamex. “It can work on inflation, exchange rates, but on growth it’s no use.” Since the start of the year, the median forecast for 2019 Mexican growth in Banxico’s monthly poll of private sector economists has fallen steadily, and now stands at 0.8% - less than half the expansion predicted at the end of last year.
“Maybe if Banxico lowers it 200 basis points, there might be a difference. Credit card rates could be back at 18%,” said James Salazar, an analyst at CI Banco. Asked in an interview with Reuters whether the rate cut would help boost growth, Bank of Mexico Governor Alejandro Diaz de Leon avoided making such a link.
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