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Banxico Holds Key Rate, Betting Inflation Spike Is Temporary

(Bloomberg) Mexico’s central bank voted to hold its key interest rate near a five-year low, betting that a price spike that sent the inflation rate to more than double its target will be temporary.Banco de Mexico, led by Governor Alejandro Diaz de Leon, kept borrowing costs at 4% on Thursday, after consumer price increases hit 6.1% in April, far beyond its 3% target. All 24 economists surveyed by Bloomberg predicted the decision, as board members seek to keep injecting crucial stimulus even while prices climb.“In a highly uncertain environment, the risks for inflation, economic activity and financial markets pose major challenges for monetary policy,” the bank’s board wrote in a statement. “Given the recent shocks that have affected inflation, it is necessary for the adjustment in relative prices to take place in an orderly manner so that an impact on price formation and inflation expectations is avoided.”The board also said that while inflat ....

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Mexico Economy Unexpectedly Grows in Sign of Quicker Rebound


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(Bloomberg) Mexico’s recovery slowed less than expected in the first quarter, as restrictive measures against a resurgent pandemic weighed on domestic demand.
Gross domestic product rose 0.4% from the previous quarter, according to preliminary data from the national statistics agency published on Friday. Economists surveyed by Bloomberg expected no growth for the period, in line with what central bank Deputy Governor Jonathan Heath predicted earlier this week. On an annual basis, GDP fell 3.8%.
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Mexico's Recovery Slowed Less Than Expected in First Quarter


Article content
(Bloomberg) Mexico’s recovery slowed less than expected in the first quarter, as restrictive measures against a resurgent pandemic weighed on domestic demand.
Gross domestic product rose 0.4% from the previous quarter, according to preliminary data from the national statistics agency published on Friday. Economists surveyed by Bloomberg expected no growth for the period, in line with what central bank Deputy Governor Jonathan Heath predicted earlier this week. On an annual basis, GDP fell 3.8%.
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Posthaste: Canadians should brace for higher mortgage rates sooner than expected


Good Morning!
Well, that was a surprise.
The Bank of Canada took a step towards easing pandemic stimulus yesterday the biggest yet by a major economy with a hawkishness that surprised many observers.
Not only did it say it would reduce purchases of government debt (which was expected), it also brought forward its timeline for a possible rate hike.
Previously, the Bank had forecast that slack in the economy would not be absorbed until 2023. Now it expects that to happen some time in the second half of 2022.
The reason is a much brighter view of the economy. The Bank hiked its growth forecast for 2021 by more than two percentage points to 6.5%. It’s now predicting 3.7% in 2022 and 3.2% in 2023, an outlook rosier than many economists. ....

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