Mexico

Mexico’s headline inflation slowed more than expected in early September, giving Banco de Mexico room to cut borrowing costs for a second straight month at this week’s interest rate meeting, Bloomberg News reported. Official data published Tuesday showed consumer prices rose 4.66% in the first two weeks of the month from the same period a year earlier, just below the 4.71% median estimate of economists surveyed by Bloomberg. The print was under the 4.83% reading in the previous two-week period.

A recent flurry of judicial and economic rule changes has served as a reminder of just how unpredictable operating in Latin America can be, denting the region’s appeal for foreign investors already weary after years of sub-par returns, Bloomberg News reported.

Mexico’s annual inflation slowed roughly in line with expectations in August as a spike in food prices faded, giving the central bank more room to consider another interest rate cut this month, Bloomberg News reported. Consumer prices rose 4.99% from a year earlier, a touch below the 5.06% median estimate from analysts in a Bloomberg survey, the national statistics institute reported on Monday. Core inflation, which excludes volatile items such as fuel, eased to 4%, at the top of the bank’s target range of 3% plus or minus one percentage point.

Foreign business chambers have been warning for weeks that a proposed overhaul of Mexico’s judiciary, that would make judges stand for election, will hurt foreign businesses and endanger investment in Mexico, the Associated Press reported. And President-elect Claudia Sheinbaum has spent weeks trying to calm those fears, saying it’s simply a pro-democracy measure. But on Friday, outgoing President Andrés Manuel López Obrador — who came up with the plan — confirmed that the sweeping changes are indeed aimed directly at foreign firms.

The Bank of Mexico cut its forecast for economic growth this year and next, according to the central bank's quarterly report on Wednesday, citing weaker foreign manufacturing demand while inflation remains stubborn, Reuters reported. The central bank for Latin America's No. 2 economy now expects 2024 gross domestic product growth of 1.5%, down from a previous forecast of 2.4%, and 1.2% growth next year from a prior forecast of 1.5%.

Beyond the common challenges like currency fluctuations and supply shocks that keep the world's central bankers up at night, in Mexico there is an additional foe for those conjuring monetary policy: protection rackets, Reuters reported. Extortion has become a massive problem in Mexico, with powerful drug cartels exerting deep influence over swathes of the country. Keen to establish new revenue streams, these groups have been turning to extorting businesses by forcing them to pay protection money. One unintended consequence: inflation.

Hundreds of Mexican federal judges went on strike Wednesday to protest a judicial-system overhaul that they say is an authoritarian power grab by departing President Andrés Manuel López Obrador, the Wall Street Journal reported. Under the proposed overhaul, judges would be required to step down and be replaced by others elected by voters. Currently, judges are appointed after a lengthy process that includes exams showing their knowledge of the law.