Bloomberg News

Carstens Says Intention Wasn’t to Signal Future Rate Decision

May 02, 2013

Mexico’s central bank Governor Agustin Carstens said his intention wasn’t to signal a future rate decision when he spoke in a radio interview April 29 and that he and his board aren’t indicating any bias on rates.

“The market or the interpretation that was given to my comment was that I was in some way prejudging a movement on interest rates,” Carstens told reporters today in Mexico City. “That wasn’t my intention.”

Carstens told Radio Formula on April 29 that policy makers may consider cutting rates if the annual inflation rate falls below 4 percent from 4.72 percent in early April. The peso weakened after his statement, and fixed-rate government peso bond yields plunged to record lows the next day. The central bank board had published its rate decision statement on April 26, in which there was no direct mention of a possible rate move.

The peso rose 0.3 percent today at 11:45 a.m. in Mexico City to 12.1633 per dollar.

“We’re not indicating any bias about the future movement of interest rates,” Carstens said today.

Adverse weather conditions and other factors that pushed inflation above the central bank’s target range are expected to be temporary, Carstens said in the April 29 Radio Formula interview. Inflation should slow to within the 2 percent to 4 percent target range in the second half of the year, he said.

“Perhaps once we’re in this circumstance there’s a possibility to consider an additional movement,” Carstens said during last week’s interview. “But while this inflationary hump, so to speak, doesn’t ease, and we don’t have the certainty that it will ease, it’s difficult to carry out an additional movement on interest rates.”

To contact the reporter on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net


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