Members of Banco de México's monetary policy committee believe that risks to the country's economic growth have increased amid ongoing tension with NAFTA negotiations and an impending presidential election, minutes from the monetary body's September meeting show.
The minutes for the Sept. 28 meeting, at which the central bank held its benchmark rate at 7.0%, noted that both the election and uncertainty over the future of NAFTA, the North American trade agreement among Mexico, the U.S. and Canada, could impact the strength of Mexico's peso.
Most of the board "warned that the balance of risks to growth has deteriorated, particularly because of the perception that adverse scenarios related to the bilateral relationship between Mexico and the United States could materialize," the minutes said. Some also pointed to the outcome of Mexico's election in mid 2018 and possible new episodes of turbulence in the international financial markets as additional risks.
The central bank said that it also would assess the potential pricing impact of recent earthquakes in the country. A central bank analyst survey released earlier in October showed that earthquakes that hit the country in the first half of September had lowered GDP growth expectations for both 2017 and 2018.
"Given the various risks that are still present, the board will be vigilant to ensure that a prudent monetary stance is maintained," the minutes noted.