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 opposite effect.
But the OECD this system could be replaced by the direct setting of key rates by the central bank when inflation comes down.
‘Further changes to the monetary policy framework via the replacement of the corto by directly setting leading interest rates might become possible once inflation recedes and the pass-through from exchange rate fluctuations to domestic prices diminishes,’ it said.
More: forbes.com
Mexico's former finance minister appointed OECD chief
Mexico's former Finance Minister Angel Gurria, has been formally appointed chief of the Organization for Economic Cooperation and Development (OECD), the OECD said in a statement.
Gurria, 55, is to replace Canadian Donald Johnston as the research institution's secretary general on June 1, 2006.
Mexico is the only Latin American member of the OECD which consists of 30 member states.
Source: news.xinhuanet.com
Mexico growth failing to combat poverty - OECD
Mexico is achieving healthy economic growth rates but is failing to filter its wealth downward to narrow the huge gulf between rich and poor, the OECD economic research organization said on Monday.
The Paris-based Organisation for Economic Cooperation and Development predicted in a report that Mexico, Latin America's second-largest economy after Brazil, would register annual economic growth of just over 4 percent over the next two years.
The OECD said that level of growth would still be too low to narrow the income gap and urged Mexico to push ahead with structural reforms that
OECD Picks Mexico's Gurria as Chief After Johnston
The 30-member Organization for Economic Cooperation and Development named former Mexican Finance Minister Jose Angel Gurria to replace retiring Secretary-General Donald Johnston.
Gurria, a 55-year-old economist who helped stabilize Mexico's economy after the 1994 peso devaluation, will take the position in June, said Nicholas Bray, a spokesman for the Paris- based OECD today. Gurria stepped down in 2000 after serving three years as finance minister of Latin America's second-biggest economy.
As head of the 44-year-old OECD, Gurria faces the task of expanding the group's role and opening it to new countries such
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
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
UPDATE 4-Mexico pushes rates lower in historic move
Mexico's central bank pushed interest rates lower on Friday for the first time in over three years to give the soft economy a boost, now that inflation is under control.
It was the first time the bank has explicitly told markets where it wants interest rates to go, and analysts said it was a major step toward a U.S.-style reference rate system.
"Considering the balance of risks versus inflation, the central bank has decided to allow a relaxation of domestic monetary conditions of no more than 25 basis points," the central bank said in
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
Mexicos Cablemas Postpones IPO Amid Tumble in Global Markets
Cablemas SA, Mexicos second-biggest cable company, postponed an initial public offering as a plunge in global stock markets eroded demand for the shares, a banker involved in the transaction said.
The company and shareholders decided not to take the company public at this time, said Pablo Pena, head of investment banking at Vector Casa de Bolsa SA, one of nine banks managing the transaction. He said Cablemas intended to raise as much as $247 million in the sale.
Mexicos benchmark Bolsa stock index has fallen 6.8 percent in the past seven
Mexico 28-day T-bill yield down to 8.42 pct
The yield on Mexico's benchmark 28-day Cetes, or T-bills, shed 8 basis points to 8.42 percent on Tuesday on expectations the central bank will push interest rates lower this week.
Longer-term rates also fell at the central bank auction.
The fall in interest rates was slightly smaller than market expectations. A Reuters survey of Cetes dealers had forecast the rate on the benchmark one-month paper would drop 10 basis points to 8.40 percent.
The yield on the 10-year peso denominated bond fell to 8.45 percent from 8.73 percent when it was last auctioned on Nov.
Mexico's Central Bank Reduces Rates to Boost Economy (Update1)
Mexico's central bank reduced its benchmark lending rate for a second time in as many months to help jumpstart a slowing economy, taking advantage of slowing inflation.
The Bank of Mexico said in a statement it will allow the overnight rate to decline to 9.25 percent from 9.50 percent following a reduction of 0.25 percentage point at its Aug. 26 meeting, which marked the first time ever the central bank set a rate for the market.
``The Mexican economy reduced its expansion rate during the first half of the year, showing lower
