Mexican Central Bank expected to hold rates on Thursday

  • Mexican Central Bank expected to hold rates at 8.25% according to Reuters polls
  • However, analysts are thinking that they could cut to reinvigorate a slowing economy

The Mexican Central Bank meet Thursday to assess the interest rate path going forward.

It is likely that they will keep rates on hold as the peso has been slipping against the dollar of late.

However, the poor growth seen in the second quarter could be cause of some concern as the Mexican economy grew only 0.1%.

On the flip side, the pace of inflation has slowed of late which raises the likelihood of a rate cut – that, coinciding with the poor growth numbers could make the weakening peso a secondary factor for the Mexican policymakers to consider.

The strengthening dollar could possibly be another factor to consider since importers could be hit hard by the possible added costs of unhedged currency flows.