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Mexico central bank cuts rates to 5.5%, virus impact seen bigger in second quarter

imageEconomy4 hours ago (May 14, 2020 02:50PM ET)

MEXICO CITY (Reuters) – The Mexican central bank’s governing board unanimously voted on Thursday to cut the key interest rate to the lowest level since December 2016, warning the impact of the coronavirus pandemic will be felt more in the second quarter.

Banxico, as the Bank of Mexico is known, cut the benchmark rate by 50 basis points to 5.50%. Finance Minister Arturo Herrera signaled in a newspaper interview published earlier on Thursday that the central bank had room to cut more, with rates well above much of the world

Some private analysts see Latin America’s second largest economy contracting by as much as 10% this year.

“Although the magnitude and duration of the effects of the pandemic are still unknown, these are expected to intensify during the second quarter, and to result in a significant contraction of employment,” the Bank of Mexico said in its monetary policy statement.

The Mexican Social Security Institute (IMSS) on Tuesday reported that 555,247 formal jobs were lost in April due to the coronavirus health crisis.

Mexico central bank cuts rates to 5.5%, virus impact seen bigger in second quarter

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