Mexico is ready to throw down with inflation, which might turn its exchange traded fund (ETF) back around after negative one-month performance.
The country took two big steps to get control of the situation: first, they raised the benchmark short-term interest rate to 7.75%, from 7.5%. It’s the first increase since October, says Tom Petruno for the L.A. Times. Then, the country announced a deal with major food companies to freeze prices on more than 150 pantry staples through the end of the year.
The food-price freeze was supposed to forestall an interest rate hike, but Mexico apparently is extra-serious about fighting inflation. So far, the markets in Mexico like the moves, too: the peso is at five year highs against the dollar.
Will Mexico’s commitment to fighting inflation give the Federal Reserve a dash of inspiration? Right now, it’s between a rock and a hard place, because tighter credit could be a death sentence for the already-precarious situation of the financial companies.
The iShares MSCI Mexico (EWW) is up 3% year-to-date, but down 6.3% in the last month.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.