Mexican central bank cuts rates, flags growth risks

Credit: REUTERS/DANIEL BECERRIL

For the third meeting in a row, Mexico's central bank voted on Thursday to cut borrowing costs, lowering the key interest rate by 25 basis points to 7.50%, and flagging that the economic growth outlook had likely worsened over the past couple of months.

Updates with details, context

MEXICO CITY, Nov 14 (Reuters) - For the third meeting in a row, Mexico's central bank voted on Thursday to cut borrowing costs, lowering the key interest rate by 25 basis points to 7.50%,and flagging that the economic growth outlook had likely worsened over the past couple of months.

The rate cut was in line with the consensus forecast of a Reuters poll of analysts published earlier this week.

Still, two of the bank's five-member board voted to cut the benchmark rate by 50 basis points to 7.25%, the bank said.

"In an environment of marked uncertainty, the balance of risks for growth remain tilted downwards," the Bank of Mexico said in a statement, saying that Mexican growth in 2019 and 2020 would likely be lower than it forecast in late August.

Then, the bank predicted the economy would grow by between 0.2% and 0.7% in 2019 and by 1.5%-2.5% in 2020.

Mexico's economy, the second largest in Latin America, narrowly escaped sliding into recession in the first half of 2019, and preliminary figures showed that gross domestic product inched forward by just 0.1% in the third quarter.

That stagnation meant that conditions of slack in the economy were growing faster than anticipated, the bank said.

Among the risks for Mexican financial assets identified by the bank were ongoing uncertainty over bilateral relations between Mexico and the United States, as well as the credit rating outlook for state oil firm Pemex and Mexico as a whole.

(Reporting by Mexico City Newsroom; editing by Frank Jack Daniel and David Gregorio)

((dave.graham@thomsonreuters.com; +52 1 55 5282 7146; Reuters Messaging: dave.graham.thomsonreuters.com@reuters.net))

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