MEXICO CITY (Reuters) – U.S. President Joe Biden’s $1.9 trillion stimulus package will help boost Mexico’s economy and exports but will also create financial market challenges in emerging economies, said Alejandro Diaz de Leon, the governor of Mexico’s central bank.
The Bank of Mexico’s five-member board will analyze at its next monetary policy meeting the impact of a recent spike in U.S. Treasury bond yields, Diaz de Leon told Reuters in an interview.
Mexico’s economy is intimately tied to the United States, its top trade partner.
“We’ve practically seen interest rates across the board pressured higher, especially in emerging economies, and with some adjustment in the exchange rate due to this readjustment in portfolios,” said Diaz de Leon.
Ten-year Treasury yields, the reference rate for global borrowing costs, climbed to 13-month highs on Friday, partly on optimism after the recovery package was signed into law, pressuring Mexican bonds and the peso currency.
By the beginning of March, the peso had depreciated to 21.5090 per U.S. dollar, its weakest level since October 2020. Meanwhile, 10-year Mexican yields increased to 6.41%, their highest since May 2020.
Banxico, as the central bank is known, cut its benchmark interest rate at its last monetary policy meeting on Feb. 11 for the first time since September, flagging uncertainty over the outlook and global efforts to tackle the pandemic.
Since then, Mexican annual inflation accelerated to its highest in four months in February, beating expectations, due to a rise in energy costs, but staying within Banxico’s target range.
At the bank’s next monetary policy meeting on March 25, “we will be incorporating the most recent information, the behavior” of rising inflation, the central banker said.
Mexico could see different sectors recover at varying speeds, as spending on goods accelerates while demand for services has struggled, he said.
Diaz de Leon said Banxico has gradually reduced the use of a swap line it has with the U.S. Federal Reserve that provides dollar liquidity, as demand for such resources from local credit institution eases.
(Reporting by Anthony Esposito and Abraham Gonzalez; Editing by Sam Holmes)
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
