MEXICO CITY -(Dow Jones)- The Bank of Mexico is expected to start cutting interest rates in the first quarter of next year, and while a majority sees a first cut in March, an increasing number of banks expect monetary easing could start earlier, according to the latest market survey by Citigroup (C) unit Banamex.
Twenty-two of the 23 banks that responded to Banamex's twice-monthly survey expect the Bank of Mexico to cut rates next year as economic growth slows sharply on the U.S. downturn.
The median estimate called for a first cut in the overnight rate target in March, although four banks expect easing to start in January and four in February. The median estimate sees the overnight rate falling to 7% by the end of 2009.
The central bank left the overnight rate target at 8.25%at its November policy meeting after annual inflation reached a seven-year high of 6.2%. The bank is waiting for signs that inflation is abating to lend monetary support to economic growth. The bank's next scheduled policy meeting is Jan. 16.
In the survey, inflation expectations were little changed at 6.3% for 2008 and 4% for 2009. Core inflation, which excludes energy and fresh fruit and vegetables was seen ending this year at 5.5% and 2009 at 3.8%.
While the U.S. Federal Reserve has aggressively cut rates - lowering the federal funds rate Tuesday to between zero and 0.25% - the Bank of Mexico and other regional central banks have been restrained by rising consumer price inflation, much of it caused by higher raw materials costs earlier in the year.
-By Anthony Harrup, Dow Jones Newswires; 5255-5001-5727; anthony.harrup@dowjones.com
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Publié le 16 Décembre 2008 Copyright © 2008 Dowjones