Mexico’s financial system is stable but global risks weigh – Central Bank

By Kylie Madry and Brendan O’Boyle

MEXICO CITY (Reuters) – Mexico’s financial system is resilient and sound despite international economic and geopolitical volatility, the central bank chief said on Wednesday during the presentation of the monetary authority’s financial stability report.

“The Mexican financial system maintains a solid and resilient position,” the central bank said in its semi-annual stability report, stressing that the country meets minimum capitalization levels.

Earlier on Wednesday, the US Federal Reserve raised its benchmark interest rate by three-quarters of a percentage point in a bid to stem stubbornly high inflation as well as an expected economic slowdown and rising unemployment for the major partner. trade from Mexico.

Mexico’s central bank governor Victoria Rodriguez said the bank would analyze the Fed’s decision and take it into account, along with other factors, before voting later this month on whether to raise interest rates or not.

A central bank deputy governor, Jonathan Heath, said a 75 basis point hike was likely.

“Obviously we have to vote… In my opinion there will be a majority and we are going to see a 75 basis point increase,” he said last week.

Mexico’s central bank warned in its report that financial stability faces risks due to the lingering effects of the COVID-19 pandemic, the repercussions of Russia’s invasion of Ukraine, and global inflationary pressures.

Banxico, as the bank is known, also warned of weaker-than-expected global economic growth, prolonged and deepening weakness in consumption and domestic investment in Mexico, and possible adjustments to the credit rating of the public oil company Pemex.

“I would like to emphasize that our country, compared to other emerging economies, has strong fundamentals both fiscally and monetary policy,” Rodriguez said at a conference accompanying the report.

(Reporting by Brendan O’Boyle and Kylie Madry; Editing by David Alire Garcia, Grant McCool and Diane Craft)

Copyright 2022 Thomson Reuters.

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Don F. Davis