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MEXICO-ECONOMY-RATE
Mexico ups interest rate, citing political uncertainty
MEXICO CITY, Nov 16, 2018 (BSS/AFP) – Mexico’s central bank raised its key
interest rate Thursday, citing a slowing global economy and political
uncertainty created by the arrival of leftist President-elect Andres Manuel
Lopez Obrador, who takes office on December 1.
The Bank of Mexico raised the rate by 0.25 point to eight percent, near
its all-time high of 8.25 percent in 2008.
The bank attributed the move to “market concerns” over how Lopez Obrador
will handle Latin America’s second-largest economy.
The anti-establishment leftist has alarmed the business world in recent
weeks by canceling a $13-billion airport project for Mexico City after
holding a controversial referendum on the issue.
The airport vote, which was not overseen by electoral authorities, “led
several ratings agencies to change their outlook for the country’s sovereign
debt from stable to negative,” the central bank said.
A bill introduced by Lopez Obrador’s party that would dramatically slash
the fees that banks can charge clients also sent stocks and the Mexican peso
plunging last week — though the president-elect later soothed markets by
saying he did not back the proposal.
The bank also cited lower growth forecasts for the world economy for this
year and next.
Mexico’s inflation rate slowed slightly to 4.9 percent in October, but is
still above the central bank’s target range of two to four percent.
The uncertain outlook for Mexico comes despite the fact that the country
reached a deal on September 30 on a new free-trade agreement with the United
States and Canada, updating the 1994 NAFTA deal — a cornerstone of the
Mexican economy — after more than a year of strained negotiations.
BSS/AFP/HR/0935