Mexico’s central bank will likely decouple from the Federal Reserve early next year by raising interest rates less than the US, after it matches the Fed during its meeting this week, according to Barclays Plc, Bloomberg News reported. Banxico will raise its key rate by 50 basis points to 10.50% on Thursday, mirroring what’s expected by the Federal Open Market Committee, before delivering a last hike of 25 basis points in February, less than the 50 basis-point increase by the Fed in January, Barclays’s analysts wrote in a report.
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Mexico
Troubled Mexican nonbank lender Credito Real is in talks with foreign bondholders, prompting creditors to delay their request for an involuntary U.S. bankruptcy hearing, according to two sources close to the matter, Reuters reported. Credito Real collapsed after it defaulted on a 170 million Swiss franc ($176 million) bond in February, prompting bonds to shed 99% of their value. The talks are centered on establishing what assets the company still had left and are viable for recovery, offering a rare chance for transparency, one source directly involved told Reuters Wednesday.
Mexican leasing firm Unifin said on Tuesday a Mexican court approved its voluntary application for declaration of bankruptcy, Reuters reported. The firm said in a statement it was forced to advance the bankruptcy filing to "protect" assets from legal proceedings, adding that the ruling will allow continued talks with creditors and the implementation of a liability restructuring plan. In addition, Unifin continues to evaluate financing opportunities to minimize disruptions in its operations and finances, the statement said.
Mexican telecommunications company Altan Redes has emerged from bankruptcy with government assistance, according to a statement published by the firm on Thursday, Reuters reported. Altan Redes announced it filed for bankruptcy in July 2021 and said it was seeking protection under Mexican law to renegotiate its debts. Mexican President Andres Manuel Lopez Obrador announced in June that the government had signed an agreement to become the majority stakeholder in Altan Redes and would bail it out.
The Bank of Mexico is expected to raise its key interest rate by 75 basis points, a Reuters poll showed on Monday, following the U.S. Federal Reserve's three-quarters of a percentage point hike last week in an effort to tame stubbornly high inflation. All 17 analysts consulted for the poll expect Banxico, as Mexico's central bank is known, to raise its benchmark rate to a record 10% this week, from 9.25%.
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The International Monetary Fund (IMF) on Friday forecast Mexico's economy will grow 2.1% in 2022 and 1.2% in 2023, saying "economic growth is expected to slow in the near term reflecting weaker U.S. growth and tighter global financial conditions," Reuters reported. The IMF said in a statement that Mexico is well-placed to navigate a turbulent global environment due to "very strong" macroeconomic policies and policy frameworks. The fund also said it welcomed the "proactive approach" from Mexico's central bank, known as Banxico, in tackling inflation with interest rate hikes.
Mexico's economic activity indicators in the third quarter point to economic growth in line with forecasts of 2.4% annual growth in 2022, the country's finance ministry said on Friday, Reuters reported. "The Mexican economy continues to grow with solid macroeconomic balances despite a challenging international environment," the ministry said in a statement. The ministry said dynamic economic activity and a strong labor market led to "positive results" in tax collection, putting it on track to meet year-end estimates.
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Mexican annual inflation slowed more than expected in the first half of October but remained far above the central bank's target rate, data from national statistics agency INEGI showed on Monday, Reuters reported. Headline inflation in Latin America's second-largest economy inched down to 8.53% from 8.64% in the second half of September. "With the measures we're taking we are seeing a slowdown in inflation," President Andres Manuel Lopez Obrador told a news conference, pointing to a pact with retailers to contain prices of key food staples.
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Mexico's economy likely stagnated in September after two months of expansion, according to a preliminary estimate provided by the national statistics agency on Thursday, Reuters reported. The Economic Activity Indicator (IOAE) did not register any variation compared to the previous month. For Mexico's secondary sector, which includes manufacturing activities, no monthly variation is expected in September either, while for the tertiary sector, covering services, a 0.1% contraction is anticipated, according to the report.
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Mexico's biggest non-bank lenders may need to become licensed banks, analysts said, as they maneuver through growing market turmoil to avoid the fate of three big peers who defaulted in the past year, Reuters reported. "Any fintech with serious, long-term ambitions will likely have to find a way to become a bank," says Mike Packer, an investor at QED, a venture capital fund which has backed several lending fintechs. During the pandemic, the non-bank institutions grew to represent 20% of Mexico's private credit market.
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