Mexico to Stay Put on Rates

Mexico’s central bank is expected to keep its monetary policy rate at 4.5% Friday, in line with the trend seen in other LatAm countries such as Peru and Chile. “With inflation on a clear downtrend and consistent with the central bank’s near-term forecast path, the authorities are likely to keep the overnight target at 4.5% through year-end,” says Morgan Stanley. Mexico’s annual inflation stood at 5.08% in August, according to the central bank. Bank of America-Merrill Lynch agrees, saying the bank will not make any cuts in this meeting and that it expects it to stay on hold until Q1 2010 before considering reversing the monetary policy cycle.