MEXICO CITY Feb 14 Mexican senators ratified
economist Javier Guzman to the board of Mexico's central bank on
Thursday and he said it was still too soon to say if the country
could cut interest rates.
Guzman, a Yale-educated economist who was nominated by new
President Enrique Pena Nieto in December, was confirmed by the
Senate on Thursday in a 81-0 vote, with 10 abstentions.
Guzman will join the other four members of the board, who
last month said they now see the conditions forming to cut
borrowing costs if inflation keeps cooling after a recent spike.
Speaking after the vote, Guzman said there were downside
risks to Mexico's economy, due mostly to the impact of sluggish
growth in the United States and Europe, while the risks to
inflation had improved.
"It's not possible to say at this time if this justifies an
interest rate cut," Guzman said, adding the board would need to
see more data.
"This cut in the interest rate would of course have to be
completely compatible with the inflation target, which is the
(central bank's) main objective," he said.
The central bank targets 3 percent inflation with a 1
percent tolerance band. After a jump in food prices last year,
the annual inflation rate has fallen from a 2-1/2-year high near
5 percent in September, to 3.25 percent in January.
"What we have right now is an inflation rate that has been
falling in a very big way, and on the other hand, we have a
monetary policy that has allowed us to absorb supply side shocks
without these shocks causing second order effects," Guzman said.
Mexico has held its benchmark rate steady at 4.50 percent
Mexico's central bank chief Agustin Carstens on Wednesday
warned that lower interest rates are not a "done deal" for Latin
America's second-largest economy, pushing investors to trim bets
on a 25 basis point rate cut by March..
Investors have still priced in a 25 bps cut by April and
some economists are eyeing the chance for a 50 bps or 75 bps
point cut this year.
Guzman fills the spot left by Deputy Governor Jose Julian
Sidaoui, who was one of the board members most concerned with
inflation. Guzman worked previously at the International
Monetary Fund and the Center of Latin-American Monetary Studies.