Central bank cuts growth forecast for 2015, 2016

Carstens said policymakers would not hesitate to raise interest rates if a recent slump in the peso begins to hit inflation expectations.
Carstens said policymakers would not hesitate to raise interest rates if a recent slump in the peso begins to hit inflation expectations.

By Joanna Zuckerman Bernstein / Reuters

Mexico’s central bank lowered its growth outlook for this year and next on Tuesday, flagging concerns about the sluggish economy, but the bank’s governor Agustin Carstens signaled further rate cuts were unlikely.

The central bank said it now sees growth in 2015 between 2.0-3.0 percent, down from the 2.5-3.5 percent in its last report, pointing to weak export growth to the United States, a drop in domestic oil output and still sluggish consumer demand.

The bank also lowered its 2016 forecast to between 2.5-3.5 percent from 2.9-3.9 percent. But the gloomier growth outlook does not mean borrowing costs are set to drop, Carstens said.

http://www.reuters.com/article/2015/05/19/mexico-economy-idUSL1N0YA1OR20150519

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