| | |  Business News | November 2008 
Mexico Central Bank Holds Interest Rates Steady
 Associated Press
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Mexico City – Mexico's central bank is keeping interest rates steady at 8.25 percent.
Banco de Mexico says it will fix rates to re-establish confidence in Mexican financial institutions and to reactivate restricted credit markets.
The interest rate has been set at 8.25 percent since August. Levels in June dropped to 7.75 percent, then rose again to 8 percent in July.
Slowed economic growth, rising material and food costs and the weakening Mexican peso drove annual inflation to 6.2 percent in the first two weeks of November. That is a seven-year high.
The peso was trading at 13.2 to the dollar Friday.
The bank says it expects inflation to rise in the fourth quarter, then drop to around 3 percent next year.
Mexico Bank Credit Growth Steady in October
Noel Randewich - Reuters
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Mexico City - Growth in Mexican bank lending to individuals and companies held steady in October, the central bank said on Friday, amid increasing concerns about defaults and fallout from the world credit debacle.
Bank lending to the private sector expanded 9.2 percent in October over the year-ago period, the same rate as in September, the central bank said in a statement.
Lending to consumers and businesses in Mexico expanded at explosive rates of around 50 percent a year in 2005 and 2006 as banks tended to a market starved of financial services after a crisis in the mid-1990s brought the industry to its knees.
But in recent months, banks have become more cautious about handing out new credit cards and consumer loans, sectors increasingly affected by non-performing loans.
Banks' consumer credit, which includes credit cards, fell 28.9 percent in October over the year-ago period, the central bank said in a statement.
Some of the drop was due to Banamex, the Mexican unit of Citigroup (C.N: Quote, Profile, Research, Stock Buzz), which recently moved credit card debt off its books and into a specialized lending company, Tarjetas Banamex.
Consumer lending fell 0.37 percent in October from September, Mexico's banking regulator said on Thursday.
Mexican banks' non-performing loans rose to 3.31 percent of their portfolios in October from 3.03 percent in September, as more consumers and businesses defaulted, the regulator also said.
Mexico's banks are considered well-capitalized. They have not loaned to subprime niches and have avoided many problems plaguing financial groups in the United States and Europe.
But defaults are expected to rise further over the coming months as the financial crisis cripples economic growth.
Since the end of last year, growth in bank lending to companies and consumers has steadily declined from an annual rate of 24 percent.
Credit from non-bank lenders rose 154 percent in October, reflecting the movement of Banamex's credit card portfolio to Tarjetas Banamex.
(Editing by Andrea Ricci) |
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