Latest news with #JonathanHeath
Reuters
3 days ago
- Business
- Reuters
Bank of Mexico cuts key interest rate to near three-year low
June 26 (Reuters) - The Bank of Mexico lowered its benchmark rate by 50 basis points on Thursday as largely expected, although the decision by the central bank's five-member governing board was not unanimous. The move brings the rate to 8.0%, the lowest since August 2022. Deputy Governor Jonathan Heath was the sole dissenter, voting to hold the rate at its previous 8.5% level. In prior decisions, he agreed with rate cuts by the board. Markets had largely expected the 50 basis point cut, with 21 of 26 analysts polled by Reuters expecting the decision. The Mexican peso strengthened just over 0.2% against the dollar after the central bank's decision. Heath told Reuters earlier this month he supported a "more cautious, more prudent" approach until inflation resumed a clear downward trajectory. Annual headline inflation in Latin America's No. 2 economy has ticked up in recent months and jumped above the central bank's target range in May. It cooled slightly in the first half of June from the second half of May, hitting 4.51%, but still outside the central bank's target range of 3% plus or minus a percentage point. In its statement on Thursday, the central bank raised its forecast for year-end average headline inflation to 3.7% from its May forecast of 3.3%, although the bank held its estimate that inflation will converge to 3% in the third quarter of 2026. Banxico, as the Bank of Mexico is known, is balancing dual challenges: It is seeking to bring down inflation while also stimulating the economy amid weak economic growth and uncertainty tied to trade tensions and geopolitical developments. The board said in its statement that its decision was "made considering the behavior of the exchange rate, the weakness of economic activity, and the possible impact of changes in trade policies worldwide." "Looking ahead, the Board will assess further adjustments to the reference rate," the statement said. Notably, Thursday's decision did not include language from the most recent three monetary policy decisions about considering future cuts of "similar magnitudes." Private sector analysts polled by Reuters in May projected that Banxico will downsize its rate cuts for the rest of the year. Their median forecast was that the central bank will end 2025 with a benchmark rate of 7.5%.
Reuters
20-06-2025
- Business
- Reuters
Bank of Mexico seen cutting key rate by 50 basis points next week
June 20 (Reuters) - Mexico's central bank is expected to cut its key interest rate by half a percentage point again in its announcement next week, although it would moderate the pace of monetary tightening going forward amid rising inflation and weak economic growth. According to a Reuters poll released on Friday, 21 of 26 economists expect the central bank to cut borrowing costs to 8%, from its current 8.5%, in what would be its fourth consecutive 50 basis point cut. Three participants expect Banxico, as the central bank is known, to take a more gradual approach by reducing interest rates by just 25 basis points, while the remaining two believe it will keep rates unchanged, following the U.S. Federal Reserve's decision this week to hold its benchmark interest rate steady. Banxico has said it is considering lowering the interbank rate again by 50 basis points in its June 26 announcement, extending a monetary readjustment cycle that began in 2024 after it raised its key interest rate to a record high of 11.25% as part of its efforts to tame inflation following the pandemic. But in May, the consumer price index exceeded the bank's official target of 3% interest rate plus or minus one percentage point, raising some doubts about whether the bank will follow through with such a significant rate reduction. Deputy Governor Jonathan Heath told Reuters last week that he believes 50 basis point cuts should be paused until the data can be evaluated further. A further 50 basis point cut would take Banxico's rate to its lowest level in three years, which could provide some relief to the weakening Mexican economy. But the majority of participants polled by Reuters said they believed the central bank should be more cautious in its next moves. Latin America's second-largest economy narrowly avoided a technical recession in the first quarter of the year, but still faces serious risks amid sluggish domestic activity and uncertainty related to U.S. tariff policies. Following next week's decision, Banxico could opt for a 25 basis point cut in its next announcement in August, according to 15 participants, possibly followed by a similar cut in September. A majority of the participants said they believed the third quarter could end with an interest rate at 7.5%.
Reuters
13-06-2025
- Business
- Reuters
Bank of Mexico's Heath wants inflation reversal before more major rate cuts
MEXICO CITY, June 13 (Reuters) - Mexico's central bank should avoid cutting its benchmark interest rate by 50 basis points until inflation resumes a clear downward trajectory, Deputy Governor Jonathan Heath told Reuters, adding his view is in the minority among the five-member board. Despite concerns over inflation, Heath said he believes the central bank will vote at the end of June to lower the key interest rate by that magnitude in what would be its fourth consecutive cut of that size, a decision he said he is skeptical of. "I believe it is time to pause, and not continue lowering the rate at the magnitude we have done in recent decisions, in order to give ourselves time to better evaluate the evolution of the data," Heath said in a written response to questions from Reuters. Debate over any rate cut underscores a key challenge confronting Mexico's central bank as it seeks to ease rising inflation while also stimulating Mexico's sluggish economy. Headline inflation in Mexico accelerated to 4.42% in May, exceeding the upper end of the central bank's target range of 3% plus or minus a percentage point. Core inflation, which excludes volatile items like some foods and oil, rose to 4.06%, its highest level in almost a year. Still, Banxico, as the central bank is known, currently forecasts inflation will fall in the third quarter before converging to its target by the third quarter of 2026. Heath said a majority of Banxico's board members believe the pickup in inflation is a "temporary phenomenon." "While I am a bit skeptical that inflation will behave as the official projection anticipates, it is clear to me that my opinion is in the minority," he said, adding he supports a "more cautious, more prudent" approach until inflation "clearly resumes a downward trajectory consistent with a convergence towards our 3% target." In May, Banxico cut its interest rate to 8.5% and reiterated it could make a further reduction depending on inflation. The bank also emphasized that a slowdown in the economy is expected and lowered its GDP growth forecast to 0.1% for 2025 from a previous 0.6% estimate. A dozen economists surveyed by Reuters expect Banxico to move forward with a rate cut of 50 basis points at its next meeting on June 26.
Reuters
11-06-2025
- Business
- Reuters
Mexico's central bank may pause rate cuts, deputy governor Heath says
MEXICO CITY, June 11 (Reuters) - Mexico's central bank may pause cuts to its benchmark interest rate in the face of an inflationary rebound, deputy governor Jonathan Heath said in an interview with local newspaper El Economista published on Wednesday. Mexico's annual inflation rate accelerated in May and exceeded the upper-end of the central bank's target range of 3% plus or minus one percentage point. "We expect this small rebound to be temporary and inflation to resume its downward trajectory in the coming months", Heath said. The inflationary rebound has created an uncertain landscape for borrowing costs in Latin America's second-largest economy, but Banxico is expected to cut its key interest rate by another half percentage point in June. Analysts believe the pace of rate cuts could slow if prices remain under control.
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.
