Bank of Mexico Governor Agustin Carstens listens during an interview in Mexico City September 13, 2012.
(Photo : Reuters/Edgard Garrido)
The U.S. Federal Reserve's decision to unleash a new stimulus program should help the Mexican economy grow and take some of the heat out of inflation, Mexico's central bank governor Agustin Carstens said on Thursday.
"We welcome the measures because for Mexico the most important issue is to have a strong U.S. economy," Carstens told Reuters in an interview after the Federal Reserve's move.
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"If monetary policy can do something to strengthen the economy of the United States, then obviously that will end up helping us as well," Carstens said. "We agree with the policies adopted."
The Fed said earlier that it would buy $40 billion of mortgage-backed debt per month until the outlook for jobs in the United States improves substantially as long as inflation remains contained.
The United States buys about 80 percent of Mexican exports, and a sharp slowdown in the United States would hurt growth south of the border.
Carstens said the measures, which sent Mexico's peso currency surging to a more than five-month high on Thursday - would also help "take the tension out of inflationary pressures" in Mexico. Comparatively tighter monetary conditions in Mexico may help to attract capital and strengthen the peso in the longer term, driving down the cost of imported goods.
The Mexican central bank has held interest rates at 4.5 percent since mid-2009, although it has recently been worried by a pick-up in inflation, caused largely by higher food prices.
It signaled last week that it might have to hike rates if inflation - which accelerated to an annualized rate of 4.57 percent at the end of August - does not come under control.
But most investors do not expect a hike in Mexican interest rates until late 2013 at the earliest.
"Carstens' comments ... reinforced my view that Banxico will stand pat for a long, long period of time," Banorte economist Gabriel Casillas said. Banxico is the acronym for Mexico's central bank.
NO KNEE-JERK REACTION
Carstens said there was no sign that the recent food price shock had become permanent. The central bank has forecast inflation will fall below 4 percent by the end of the year.
In any case, the central bank will not react automatically to the looser monetary conditions in the United States, as it is balancing several other factors, he said.
"I think it's too early to make a judgment, we have to see everything in context and (the Fed stimulus) is not something that would trigger any action on the part of the Banco de Mexico by itself," Carstens said.
"We have to see how different prices respond to these actions. Obviously we have just seen an immediate and important appreciation in the peso and, well, this is one factor that helps combat inflation pressures, but on the other hand we have the issues with agricultural prices."
Carstens said there were still concerns over the U.S. Congress' ability to prevent a year-end "fiscal cliff" -- the expiration of Bush-era tax cuts and the introduction of previously agreed cuts in defense spending and social programs -- causing new damage to the U.S. economy.
"It's not in the interest of the United States or the world for the United States to enter into recession because of a lack of decision in fiscal matters," he said.
Mexican manufacturing activity and exports tend to move in tandem with manufacturing in the United States, due to the close links between factories in the border region.