Mexico cenbank to keep monetary ’short’ for now
Mexico has no plans to abandon the money market ’short’ it once used to fix monetary policy even though it now sets interest rates more directly, central bank governor Guillermo Ortiz said on Thursday.
“We now have two (instruments), an interest rate floor and the short,” Ortiz said after a speech in Mexico City. “We’re keeping the short hidden away in a little box for now, in case we need it.”
For years, the central bank controlled monetary policy by tweaking the short, a restriction on the amount of overnight lending to banks that influenced interest rates.
But it changed tack last August with a more direct policy of giving markets a floor below which it would not allow interest rates to fall.
The policy has effectively set interest rates ever since and has been used to push the benchmark overnight rate down to 8.25 percent from 9.75 percent.
More: today.reuters.com
Mexico cenbank eases rates by 25 basis points
Mexico's central bank pushed interest rates 25 basis points lower for a fourth straight month on Friday to fan a weak economy.
With inflation under control, the central bank said it would allow the overnight lending rate to fall to 8.75 percent. The move had been widely expected.
The bank held its money market steady at 79 million pesos per day. The bank controlled monetary policy through changes to the short before it began pushing rates down directly.
After a long period of tightening monetary policy to bring inflation down, the central bank changed direction
UPDATE 1-Mexico's central bank holds monetary policy steady
Mexico's central bank held monetary policy steady on Friday, pausing in its current loosening cycle as expected, despite record low inflation and a weak economy.
The central bank said in its twice-monthly policy review it was keeping its money market "short" steady at 79 million pesos a day. The short is one of the Banco de Mexico's main monetary policy tools.
A decrease in the short increases overnight lending to banks and tends to push interest rates lower, which encourages borrowing to stimulate economic growth.
At its last policy review on Aug. 26, Mexico's central
UPDATE 4-Mexico holds rates steady, sees inflation easing
Mexico's central bank on Friday said it expects inflation to drop inside its target range this year, but refused to ease monetary policy for now and insisted that interest rates should remain high.
The central bank board said after its twice-monthly policy meeting it was keeping its money market "short" steady at 79 million pesos a day. An increase in the short reduces overnight lending to banks and tends to push interest rates higher.
Although the bank said it sees inflation falling inside the target range of 2 percent to 4 percent this year, it
UPDATE 2-Mexico central bank holds interest rates steady
Mexico's central bank held interest rates steady on Friday, although it is widely expected to push them lower later this month to help a struggling economy.
With manufacturing output weak, the central bank began pushing rates lower in August and markets expect further cuts ahead, but analysts differ over whether policy-makers will pause in the easing cycle as the race for July 2006 elections heats up.
The bank said in its twice-monthly policy review on Friday it was keeping its money market "short" steady at 79 million pesos a day and made no change
UPDATE 1-Mexico 28-day T-bill yield falls to 9.36 pct
The yield on Mexico's benchmark 28-day Cetes, or T-bills, shed 6 basis points to 9.36 percent on Tuesday, as investors bet the central bank will push down its key interest rate over the next few months.
Longer-term rates also fell at the central bank auction.
The decline in short-term interest rates was slightly bigger than market expectations. A Reuters survey of Cetes dealers had forecast the rate on the benchmark one-month paper would edge down 3 basis points to 9.39 percent.
Following signs of a strong improvement in inflation, Mexico's central bank pushed interest rates
UPDATE 1-Mexico central bank holds interest rates steady
Mexico's central bank held interest rates steady on Friday, although it is widely expected to push them lower again later this month to help a soft economy.
The central bank said in its twice-monthly policy review it was keeping its money market "short" unchanged at 79 million pesos a day and made no change to the country's overnight lending rate, which stands at 9.00 percent.
The short regulates overnight lending levels and was the central bank's main monetary policy weapon before it recently began explicitly telling markets how much rates should move.
With inflation under
OECD says Mexico could eventually move to direct setting of rates, drop 'corto'
The Mexican central bank could eventually drop the 'corto' mechanism and switch to a system of directly setting interest rates, the OECD said in a report on the Mexican economy.
The Bank of Mexico currently influences market interest rates through the 'corto' instrument, under which it sets a target for the amount held by banks in accounts at the central bank.
An increase in this target drains liquidity from the money market and pushes short-term interest rates higher, while an increase in the 'corto' target produces the
Short on trucks, GM gears up in Mexico
With its employee-pricing sale over, General Motors Corp. is turning to its Mexican factories to replenish the stocks of American auto dealers.
"We're short on trucks. Dealers don't have them in all the colors and with all the options that people want," said Gilbert Duhn, a customs manager for the company. "We've started building more trucks in Mexico."
Such a move wouldn't be possible without the North American Free Trade Agreement, Duhn said during a speech at the NAFTA vs. Global Competition conference here, which ended Friday. The two-day event was hosted by
UPDATE 1-Mexico 28-day T-bills edge lower to 9.60 pct
The yield on Mexico's benchmark 28-day Cetes, or T-bills, edged one basis point lower to 9.60 percent on Tuesday as investors expect the central bank to hold monetary policy steady at a policy meeting this week.
Longer-term rates moved lower, reflecting growing expectations that interest rates could come down in coming weeks.
T-bill rates have drifted slightly lower in recent weeks as the inflation fears eased and the central bank set an informal reference rate in the secondary market.
Mexico's central bank is due to hold its twice-monthly monetary policy review on Friday and most
Mexico inflation at 0.67 pct in first half November
Mexican consumer prices rose 0.67 percent in the first half of November, the central bank said on Thursday, slightly above expectations but not high enough to stop it from loosening monetary policy on Friday.
A Reuters poll of analysts had a median forecast of 0.65 percent.
Closely watched core inflation, which strips out volatile food and energy prices, was 0.12 percent for the first half of the month, compared with expectations of 0.15 percent.
The central bank began easing rates on Aug. 26 to boost a sluggish economy weighed down by a limp manufacturing
