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The Bank of Mexico is worried that the depreciation of the peso against the dolar will push up inflation, and by raising interest rates it will restrain spending and contain those price pressures. This situation can affect trade between US-Mexico. EFE/Archivo
The Bank of Mexico is worried that the depreciation of the peso against the dolar will push up inflation, and by raising interest rates it will restrain spending and contain those price pressures. This situation can affect trade between US-Mexico. EFE…

Peso Pesado

In a call to protectionism, President-elect Donald Trump has promised to stop foreign countries like China and Mexico from stealing American jobs. How is he going to fulfil his populist promises, that’s another question. Last week, Mr. Trump proudly anouned that Ford was keeping production of an SUV in Kentucky instead of moving it to Mexico. But he forgot to announce that Mexico’s central bank is raising interest rates in response to the peso’s 11% plunge since Mr. Trump was elected.

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In a call to protectionism, President-elect Donald Trump has promised to stop foreign countries like China and Mexico from stealing American jobs. How is he going to fulfil his populist promises, that’s another question. Last week, Mr. Trump proudly anouned that Ford was keeping production of an SUV in Kentucky instead of moving it to Mexico. But he forgot to announce that Mexico’s central bank is raising interest rates in response to the peso’s 11% plunge since Mr. Trump was elected. The combination of a weaker peso and higher Mexican interest rates will together quell Mexican demand for imports from the U.S. and, depending on how exports respond, likely widen the U.S. trade deficit with Mexico, warns The Wall Street Journal.
 

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