February 10, 2020 / 5:36 PM / 2 months ago

POLL-Mexico's central bank expected to make fifth consecutive rate cut

MEXICO CITY, Feb 10 (Reuters) - Mexico’s central bank is expected to lower its key interest rate again on Thursday, according to a Reuters poll of analysts, as the economy appears to be stagnating.

A Reuters poll found that 23 of 24 analysts surveyed expected the Bank of Mexico, known as Banxico, to lower the rate by 25 basis points to 7%, which would be the bank’s fifth rate cut since August.

Mexico’s economy contracted 0.1% percent last year, its first such decline in a decade. Annual inflation rose 3.24% in the year through January, above the bank’s target of 3%.

“The tone of the statement will likely continue to be ‘dovish’ in the face of low growth levels, negative output gap, and additional downside risks on the horizon,” Banorte analysts wrote in a note to clients.

“However, it will be important to analyse possible changes in tone, with annual inflation beginning to rise in the second half of December and rising above the target”, the Banorte note added.

During Banxico’s December meeting, when a 25% rate cut was announced, the bank highlighted concerns that a recent minimum wage hike could stoke inflation.

The central bank will publish its monetary policy statement on Thursday at 1:00 p.m. local time (1900 GMT). (Additional reporting by Gabriel Burin in Buenos Aires; Editing by Drazen Jorgic and David Gregorio)

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