PREVIEW-Mexico seen leaving interest rates steady Friday

WHAT: Mexico monthly interest rate decision

WHEN: Friday, July 16, 9 a.m. (1400 GMT)

REUTERS FORECAST: Analysts unanimously see the Mexican
central bank holding its interbank reference rate at 4.5
percent. Twenty clients participated in the survey.

FACTORS TO WATCH: Mexico’s central bank has held interest
rates low this year to prop up the weak economy, and in June
said that inflation still looked benign. Most economists expect
policymakers won’t raise interest rates this year.

Consumer prices fell for the third straight month in June,
so it will be interesting to see if the bank again signals that
economic weakness is keeping inflation in check. On the other
hand, comments about renewed domestic demand would support
views the bank is planning an eventual rate hike.

MARKET IMPACT: A repeat of the view that inflation is
benign could lead yields on interest rate swaps (MXNIRS2=: ) to
fall as investors bet the central bank will wait longer to
raise rates.

Central bank website for policy decision:

All Mexico economic data (ECONALLMX: )

Today’s data (ECONMX: )
(Reporting by Lizbeth Salazar and Jean Luis Arce, Editing by
Chizu Nomiyama)

PREVIEW-Mexico seen leaving interest rates steady Friday