Mexico

Bank of Mexico's main focus is tackling inflation, deputy governor Galia Borja said on Thursday, when asked how fears of a banking crisis roiling U.S. and European markets could impact monetary policy at the central bank, Reuters reported. "Many variables come into play," Borja told Reuters on the sidelines of a banking convention in the city of Merida in Mexico's Yucatan peninsula. "But the main one is inflation, which is our mandate." "The behavior of inflation is more important, but we take everything into account," she added.

Mexico's inflation likely slowed in February but still remained well above the official target, fueling expectations the central bank will raise its key rate again in its next monetary policy announcement at the end of March, Reuters reported. The median forecast of 17 analysts shows annual inflation at 7.69% in February, down from the 7.91% posted in January, but nevertheless far above the Bank of Mexico's target of 3% plus or minus one percentage point.

Mexico’s central bank trimmed its economic growth forecasts for this year and next, after raising borrowing costs more aggressively than expected in February, Bloomberg News reported. Banxico, as the central bank is known, estimates that gross domestic product will expand 1.6% in 2023, according to the main scenario of its quarterly inflation report released Wednesday. That’s below the 1.8% seen in the previous report, which was published Nov. 30. For 2024, it forecasts growth of 1.8%, down from 2.1%.

Mexican President Andres Manuel Lopez Obrador said on Thursday he will launch a plan to tame inflation with other Latin American governments, Reuters reported. Lopez Obrador said he has already spoken with the presidents of Brazil, Argentina, Cuba and Colombia to join forces in a plan that seeks to remove tariffs to reduce the price of food items. "We are going to carry out an anti-inflationary plan of mutual aid and growth, for economic and commercial exchange between Latin American countries," the president said in a regular news conference.

Omar Mejia, recently appointed deputy governor of Mexico's central bank, said on Wednesday the institution could consider slowing the pace of raising its key interest rate and the economy should continue to grow this year despite tight monetary policy, Reuters reported. "I believe that going forward we could consider slowing the pace of rate adjustments, as it is already very close to the appropriate level to consolidate a de-inflationary process," he said in a podcast interview with Grupo Financiero Banorte.

Bank of Mexico board member Jonathan Heath said in a newspaper interview published on Monday that he does not see the central bank's benchmark interest rate reaching 12%, Reuters reported. "In my very personal opinion and based on the data available today, I do not see the terminal rate reaching 12%, but rather I estimate that it will be located in a range of 11.25% to 11.75%," Heath told newspaper El Financiero. The central bank's governing board raised its key interest rate to a record 11% this month amid stubborn inflation.

Mexico's headline inflation decelerated more than forecast by analysts in early February, data from the national statistics agency showed on Thursday, Reuters reported. Annual headline inflation in the first half of the month came down to 7.76% from 7.94% a month earlier, while economists polled by Reuters had forecast 7.80%. Meanwhile the core index, which strips out some volatile food and energy prices, hit 8.38% on an annual basis, with a surprise of -0.04%. However, annual inflation still remains above the Bank of Mexico's target rate of 3%, plus or minus one percentage point.

The Bank of Mexico's monetary tightening cycle is nearing its end and nominal interest rates could top out between 11.25% and 11.75%, at which point rates would be kept steady to allow them to take effect, deputy bank governor Jonathan Heath said, Reuters reported. Banxico, as the Mexican central bank is known, has raised its benchmark interest rate by 700 basis points since its rate-hiking cycle started in June 2021, as inflation surged far beyond its target of 3%, plus or minus 1 percentage point.

Mexican airline Aeromar announced the "definitive end" of operations on Wednesday, as the heavily indebted company failed to reach agreements with providers and a rumored potential investor, Reuters reported. The struggling company is the latest in a string of Mexican airlines hit with major financial woes in recent years, following Interjet in 2020 and Aeromexico, which came out of bankruptcy proceedings last March. Like its peers, Aeromar was hit hard by the coronavirus pandemic in 2020, but had shown signs of financial struggles before.

Mexican same-store retail sales rose by 10.6% across 2022 compared to the previous year, as the highest inflation in over two decades sent prices soaring, Mexican retailers' association ANTAD said Wednesday, with sales expected to moderate in 2023, Reuters reported. In 2022, sales at the retail group's member stores totaled 1.43 trillion Mexican pesos ($76.08 billion). The retail group said in a statement that surging consumer prices were partly responsible for the sales growth last year, as top-line inflation reached 7.82% in December.