Mexico's Central Bank Leaves Interest Rate Unchanged at 3%

laht.com

MEXICO CITY – The Mexico Central Bank left the overnight rate unchanged at 3.0% in Thursday’s policy meeting, matching market expectations.

The closing paragraph from the statement was almost identical to the one from the 26 March statement. The bank wrote that it will remain watchful of all determinants of inflation and of medium- and long-term inflation expectations, but particularly the relative monetary policy stance (Mexico-United States) and the performance of the exchange rate trend.

One subtle change relative to March was that in March the bank wrote it would watch the performance of the exchange rate, and not of its trend. Analysts believe that this may be an attempt to signal that the currency trend is more important than outright levels.

The central bank sounded less upbeat about global growth than in March. In this week's report, it wrote that weakness has become more generalized across countries and regions. In March, it had written that the drop in oil prices could result in a net positive for global growth.

On the US Fed, the central bank wrote that there is now a stronger perception that liftoff will take even longer than previously anticipated. The bank argued that the drop in volatility in some international financial markets since 26 March was in response to the expectations of a later liftoff date by the US Fed.

On the domestic front, the bank upgraded somewhat its assessment of the state of the economy. In March, it wrote that economic activity had had a somewhat weak performance. This week, it wrote that economic activity continued to show moderate growth. Similarly, in March it wrote that consumption indicators had shown “little vigor.” In its latest statement, it wrote that “some consumption indicators seem to be showing some recovery.”

In March, the bank wrote that the balance of risks to growth had worsened; this week, it wrote that the balance of risks is still biased to the downside, but it did not worsen relative to late March.

Finally, on the inflation front, the bank’s assessment was almost identical to the one from the March policy statement. Specifically, the bank continues to project annual headline inflation to be “near” 3.0% in upcoming months and that it will close the year below this level. Meanwhile, the bank projects annual core inflation to be below 3.0% throughout 2015. For next year, it projects annual headline and core inflation to be “near” 3.0%. The bank reiterated that pass-through from peso weakness has been in line with expectations, impacting mainly durable goods, and without second-round effects.

"Barring a major depreciation of the peso in the next five weeks, we think that the central bank will leave the overnight rate unchanged at 3.0% in the next monetary policy meeting on 4 June," writes Alonso Cervera of Credit Suisse. "For now, the exchange rate continues to be the key variable that will likely determine the timing and extent of interest rate hikes in the remainder of 2015. We think that next year, the expected rise in inflation, and likely higher interest rates in the US will be particularly important."

Peña Nieto enacts financial reform

Friday, 10 January 2014 00:10 
BY MAURILIO SOTO
The News


MEXICO CITY – President Enrique Peña Nieto promulgated the financial reform law yesterday at his Los Pinos residence, saying that it will promote responsible lending which will create true economic growth and greater productivity in Mexico.

He promised that changes to the lending rules would have a favorable impact on the national economy by making credit more easily available to Mexicans and local companies, as well as increasing and democratizing productivity, which will facilitate entrepreneurs’ access to much needed resources. With “more and cheaper credit,” Peña Nieto said that small- and medium-sized companies will be able to grow, modernize and generate more jobs for Mexicans.

He said that the legislative process was enriched by the nation’s political forces, something that confirms the “political maturity” of the current Mexican democratic system. The law was approved with input from Mexico’s three major political parties as part of the Pact for Mexico agreement.

The four central objectives of the new banking law, according to Peña Nieto, are to boost the Mexican development bank; to improve the judicial framework providing more credit at lower interest rates; to increase competition in the financial sector multiplying and improving credit options for Mexicans; and to strengthen the soundness of the financial system.

“With more competition between banks, we will have lower interest rates, lower commissions, and ... better financial services,” he said.

Mexican Central Bank Governor Agustín Carstens described the new banking law as “one of the most ambitious ... laws in the sector that Mexico has passed in the last several decades.”

Real Estate Abroad: Securing a Mortgage for a Home Overseas

voices.yahoo.com

Steve Thompson, Yahoo Contributor Network
Sep 17, 2007 

 

 

Many Americans dream of owning a home overseas, particularly since real estate markets abroad often fair better when American markets begin to plummet. Whether you're interested in investing in a home in another country or you are looking for a vacation property, securing a mortgage for a home overseas can be tricky.

 

Most American mortgage lenders will balk at the idea of financing a home overseas because they have very little recourse should you default on the loan. Some mortgage companies advertise that the specialize in mortgages abroad, but you have to be careful about these lenders because the interest rates can be exorbitant. Scammers have infected the American real estate market, so be careful about doing business with a lender you don't know.

There are a few legitimate American lenders who finance homes in Canada and Mexico, while a few others specialize in homes in South America. IMI Group in Phoenix, AZ is one example (imigrou.us), and Collateral International (collateralinternational.com), in Birmingham, AL, is another. If you work with an upstanding institution that specializes specifically in securing mortgages for overseas homes, you stand a better chance of getting a favorable interest rate.

It is also possible to find a mortgage company in the overseas country where you plan to purchase a home. Some financial institutions are more than happy to work with Americans. This might take several extra hours of research as you talk with potential lenders in other countries---not to mention the ridiculous long-distance bill---but it can be worth it if you are serious about buying a home overseas.

Unfortunately, however, mortgage lenders in other countries typically expect shorter mortgage lifespans. While a thirty-year mortgage isn't uncommon in the States, five years is often the maximum abroad. You must be able to pay the house off in your current financial position in just a few years if you want to take this route. They might also expect higher down payments, often in excess of 50% up front.

Another option you have with securing a mortgage for a home overseas is to find properties that offer seller financing, which means that you purchase the house directly form the seller and work out a mortgage arrangement between the two of you. This is more common overseas than it is here in the States, and the interest rates might be much lower. Beware predatory sellers, however, and make sure you have an attorney look over the contract before you sign it.

And finally, the most attractive option when buying a home overseas is often to purchase the property outright. If you have sufficient financial resources to pay for the house up front, you can avoid higher interest rates and complicated mortgage contracts altogether. Home owners in some countries---such as those in South and Latin America---are willing to knock a substantial amount off the price for buyers who are willing to pay cash.

Mexico central bank seen holding interest rate steady

MEXICO CITY Fri Dec 6, 2013 
reuters.com

 

MEXICO CITY Dec 6 (Reuters) - Mexico's central bank is expected to hold its benchmark interest rate steady on Friday amid signs of a recovery from a downturn in Latin America's No. 2 economy.
All 17 analysts surveyed last week by Reuters expect the central bank to hold its main interest rate at a record low of 3.50 percent.

The central bank lowered borrowing costs in September and October after an economic contraction in the second quarter but policymakers said they were done cutting rates as the economy recovered in the third quarter.

Since their last meeting, the economy has shown mixed signals, with stronger exports countered by flagging consumer confidence, and policymakers will likely point to persistent risks to growth that justify low interest rates for some time.

Meanwhile, annual inflation picked up in early November to 3.51 percent on a seasonal spike in electricity costs, but tame core price pressures give policymakers plenty of room to leave borrowing costs steady.

The median of analysts polled by Citigroup unit Banamex expect the economy to grow 1.3 percent this year, a sharp slowdown from the 3.8 percent rate seen in 2012. The economy is seen picking up next year to grow nearly 3.5 percent, according to the Banamex poll released on Thursday.

While the median estimate of the Banamex poll suggests the central bank will not raise interest rates until March 2015, bets in the interest rate swap market point to higher rates sometime after the first half of next year..

Data last week showed Mexican factory exports rose in October in a sign of strengthening U.S. demand, while a report this week showed factory sentiment rose to an eight-month high in November.

Mexican consumer confidence fell in November for the third month in a row, to its lowest in nearly two years, suggesting that the economy is unlikely to see demand-side pressure push up inflation any time soon.