• MEASURES: Today, Mexico’s central bank (BANXICO) announced an injection of US $31 billion to support liquidity in the financial system and a cut to its benchmark interest rate by 50 basis points, in what is perceived as the country’s most ambitious response to the coronavirus shock so far.
• UNANNOUNCED: Following an unannounced meeting, the five-member Governing Board voted unanimously to reduce the interest rate to 6%, a three-year low. The new measures to pump liquidity into the financial market following concerns regarding the survival of small and medium businesses.
• SYSTEM: “The Governing Board also decided to implement additional measures to foster an orderly behavior of financial markets, strengthen the credit channels, and provide liquidity for the sound development of the financial system”, the central bank said in a statement.
• ESTIMATES: Earlier today, Citibank’s Mexico unit estimated that the Mexican economy will contract by 9% in 2020. This is the latest in a long series of dire estimates by financial institutions about the state of the Mexican economy. Many analysts are still questioning the absence of any fiscal stimulus.
