Mexico Leaves Rate Unchanged

Mexico’s central bank has left its monetary policy rate intact at 4.5%, in line with market expectations. Barclays says the bank’s statement includes a “fairly tranquil reading of external conditions and slightly more upbeat look on the domestic demand.” This, says the shop, should limit rate cut speculations in coming months, though it does not believe this signals imminent intentions to begin normalizing monetary conditions. Barclays expects unchanged rates until Q2 2011. Morgan Stanley notes that the MXP has weakened from its April levels of around MXP12.20/USD, reducing the need for the bank to adjust the rate.