Mexican central bank warns of significant risk factors
MEXICO CITY, April 12 (Xinhua) -- Mexico's central bank (Banxico) said Thursday that the Mexican economy is facing considerable risks, although it is in a strong position to face them.
In a statement on monetary policy, Banxico said that the adoption of protectionist measures or the rise of unspecified geopolitical events could pose threats.
"The Mexican economy faces considerable risk factors, although the balance of risks for growth continues to trend downwards," it wrote.
However, Banxico added that its increase of interest rates had helped the Mexican economy be in a better position to face possible adverse scenarios.
Furthermore, the meeting of fiscal objectives in 2017, the government's commitment to repeat this success in 2018 and the resilience of the financial system have also helped.
These scenarios could potentially include a continuing unfavorable negotiation process for the North American Free Trade Agreement (NAFTA), which would cause a depreciation of the Mexican peso.
Banxico also pointed to the possibility of conditions becoming more restrictive on global financial markets, due to monetary decisions taken by the United States.
"From here on, (Banxico) will maintain a prudent monetary policy and will continue giving special attention to the potential impact of exchange rate variations on prices," it said.
On Thursday, Banxico left Mexico's key interest rate unchanged at 7.5 percent, representing a pause after increases in December 2017 and February 2018.
Inflation in Mexico reached 6.77 percent at the end of 2017, its highest rate in over 16 years, sparking a series of rate hikes by Banxico to its current level.
The central bank predicted Mexico would grow between 2 to 3 percent this year and between 2.2 to 3.2 percent in 2019.
In 2017, Latin America's second largest economy grew by 2 percent, a slowdown from 2.9 percent the year before.