The Day at a Glance | February 15 2021

The Top

· Gerardo Esquivel, Deputy Governor of the Central Bank of Mexico, considers there is still room for two more cuts in interest rates.

· The Japanese economy surprisingly recorded a 12.7% annualized rate of growth in the 4Q20.

· Ngozi Okonjo-Iweala was elected to lead the World Trade Organization.

Economic environment

According to Gerardo Esquivel, Deputy Governor of the Central Bank of Mexico, there could be room to carry out two more cuts in interest rates if inflation stays in line with expectations. In an interview with Bloomberg News, the Deputy Governor stated that, in principle, there could still be an opportunity to cut the interest rate two more times and take it to 3.5% by the end of 2021 – given the bank`s expectations and forecasts. However, this will depend on whether or not inflation maintains its downwards trend. It`s possible that a cut could occur in March, said Esquivel, even though Banxico will remain focused on inflation`s trend, which is expected to considerably rebound in the following months due to the recovery in energy prices. If this doesn`t happen in March, it can be expected to occur in June once price indicators start to stabilize, the Deputy Governor assured. Regarding the economy`s growth, Esquivel expects the country`s GDP to recovery 5% in 2021 and for Mexico to overcome the pandemic more swiftly than other emerging economies because of its low levels of indebtedness. He even expects international credit rating agencies to acknowledge the country`s solid financial position amidst an environment through which most of the world has substantially increased its levels of indebtedness.