Latest news with #JonathanHeath
Bloomberg
07-05-2025
- Business
- Bloomberg
Mexico's Slowing Economy Gives Banxico Space to Cut Key Rate, Official Says
Mexico's central bank has room to continue cutting its benchmark interest rate as the country's economy slows and the odds of a recession increase, according to Deputy Governor Jonathan Heath. The current economic scenario makes it 'highly likely' that Banxico, as the bank is known, will continue to lower interest rates at its May 15 meeting while maintaining the restrictive stance necessary to bring inflation to target, Heath said in an interview on the Grupo Financiero Banorte podcast released Wednesday.
Reuters
07-05-2025
- Business
- Reuters
Mexico central bank still has room to lower benchmark rate, Heath says
MEXICO CITY, May 7 (Reuters) - There is still room for Mexico's central bank to lower its benchmark interest rate, deputy governor Jonathan Heath said in a podcast with lender Banorte published on Wednesday. Last month, the Bank of Mexico cut its interest rate 50 basis points to 9% in a unanimous decision, while its board also warned of uncertainty linked to trade tensions worldwide. Heath added that it was highly likely that the monetary authority would continue lowering the rate, while maintaining caution amid an uncertain economic scenario. Speaking about the current economic uncertainty linked to tariffs imposed by the U.S. government, Heath noted that "in the face of all these risks, we are still underpinning a restrictive monetary stance, but less and less restrictive than we had previously anticipated." He added that all scenarios considered by the central bank expected a slowdown in Mexico's economy, as well as in the United States.
Yahoo
10-02-2025
- Business
- Yahoo
Banxico Delivers Half Point Cut, Considers More of Same Size
(Bloomberg) -- Mexico's central bank delivered a half-point cut to its key interest rate and said it would consider additional reductions of the same size as inflation is back in the target range, growth is slowing and US tariffs have been delayed. Citadel to Leave Namesake Chicago Tower as Employees Relocate NYC Sees Pedestrian Traffic Increase in Congestion-Pricing Zone Transportation Memos Favor Places With Higher Birth and Marriage Rates State Farm Seeks Emergency California Rate Hike After Fires How London's Taxi Drivers Navigate the City Without GPS Banxico, as the bank is known, lowered borrowing costs to 9.5% on Thursday after four straight quarter-point reductions. The move was expected by 22 of 26 economists surveyed by Bloomberg. Three saw a quarter-point cut and one forecast no change in the benchmark rate. The decision was split, with Deputy Governor Jonathan Heath voting for a smaller cut of a quarter-point. The new member of the board, Jose Gabriel Cuadra, who was appointed by the Senate Wednesday night, voted for a half-point cut. 'The Board estimates that looking forward it could continue calibrating the monetary policy stance and consider adjusting it in similar magnitudes,' policymakers wrote in a statement accompanying their decision. 'It anticipates that the inflationary environment will allow the rate cutting cycle to continue, albeit maintaining a restrictive stance.' Policymakers found space to step up their easing campaign after Donald Trump decided on Monday to delay by a month the 25% tariffs on Mexican exports he had announced just two days before. Yet his economic threats still hang over billions of dollars in cross-boarder commerce, discouraging investment in Mexico. 'A few weeks ago, this (50bps) was an out-of-consensus call but became consensus on Monday right after US President Trump postponed the implementation of tariffs,' said Gabriel Casillas, chief Latin American economist at Barclays. Banxico said that even if inflation expectations for the medium and long term remained relatively stable, the balance of risks for the trajectory of inflation remains biased to the upside. 'Announcements of possible changes in economic policy by the new US administration have added uncertainty to the projections,' policymakers added in the statement. 'The statement is dovish, guiding for another 50bp-cut in March. We believe that is conditional on tariffs,' said Carlos Capistran, chief economist for Canada and Mexico at Bank of America. 'But if there are no tariffs before the March decision, Banxico clearly wants to do another 50bp. I still think that the increase in speed does not imply a lower terminal rate.' The half-point cut was mainly due to 'the slowdown in the economy, lower inflation and less pressure on the peso,' Alejandro Cuadrado, head of global FX and Latin America strategy at Banco Bilbao Vizcaya Argentaria SA, said before the decision. Since December, Mexican policymakers had been talking about the possibility of a larger cut, thanks to progress in the disinflation process. Mexico's annual inflation slowed to 3.69% in early January, down from 3.99% in December and more than a full percentage point lower than in October. Banxico targets inflation of 3%, plus or minus 1 percentage point. The core reading, which strips out volatile items such as energy and food and is closely watched by Banxico, came in at 3.72%. The Mexican peso trimmed its advance a bit after the decision, but was still gaining around 0.4% against the dollar. A greater depreciation of the peso is among the upward risks for inflation, the bank said in the statement. Tariff uncertainty is likely to keep weighing on an economy that has already been weakening: it grew only 1.5% last year, shrinking more than economists expected in the last three months of 2024. Banxico currently estimates gross domestic product to expand 1.2% in 2025 — with risks tilted to the downside. 'The balance of risks to growth has deteriorated, signaling that the bank is concerned about an economic slowdown. We believe Banxico will try to lower its policy rate to 8.0% quickly, which is the upper bound of the neutral range,' said Benito Berber, chief Latin American economist at Natixis. While a potential trade war with the US would exacerbate the economic slowdown and fan price pressures, Banxico's board is now focused on 'the fact that the real rate is high and the economy has decelerated,' said Valeria Moy, director of The Mexican Institute for Competitiveness, a think tank in Mexico City. --With assistance from Rafael Gayol and Valentine Hilaire. 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