WASHINGTON Federal Reserve Chairman Ben Bernanke on Monday praised Mexico's central bank for reining in inflation and keeping financial crises at bay.
In a speech that made no reference to the current outlook for the U.S. economy or monetary policy, Bernanke said transparency and independence had been key to increasing stability in the Mexican economy.
"The changes to the monetary policy framework, along with greater fiscal discipline and the adoption of a more flexible exchange rate, soon bore fruit," Bernanke said in prerecorded video to be aired at a celebration of 20 years of Mexican central bank independence, in Mexico City.
"The improved monetary policy framework, together with other reforms, has thus far helped reduce Mexico's susceptibility to financial crises."
While it is true that Mexico has largely avoided a repeat of the 1994 peso crisis, it was certainly not immune to the deep global recession whose epicenter was Mexico's main trading partner, the United States. As world credit - and trade - ground to a halt, Mexico suffered one of the worst downturns globally.
Now in recovery, the latest setback came from severe flooding that has laid waste to large areas of farmland, destroyed homes and killed dozens of people. The flooding will not tip the country into recession, according to a Reuters poll of economists last week, but the catastrophe has increased the risks of a contraction.
Mexican gross domestic product suffered a surprise decline of 0.7 percent in the second quarter compared with the previous three month period after eking out growth of less than one tenth of a point in the January-March period.
That stumbling performance has put Latin America's second biggest economy on track for its worst year since 2009.
(Reporting By Pedro Nicolaci da Costa; Editing by Chizu Nomiyama)