Published On: Thu, Nov 3rd, 2016

With U.S. election looming, Mexico is preparing economic ‘contingency plan’

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Mexico is readying a contingency plan for an “adverse” election result in the United States, said Central Bank Governor Agustin Carstens, who has previously stated that a victory for Donald Trump would hit his country like a hurricane.

“If the adverse situation materializes it’s foreseeable that the Mexican authorities respond in some way. It’s a contingency plan that we’re discussing with the finance ministry, we hope we don’t have to use it,” Carstens told Milenio television late on Wednesday Nov. 2.

Without naming Republican nominee Donald Trump, Carstens said there was an “adverse” candidate for Mexico in the election, which is due to be held on Nov. 8. He also noted there could be market volatility following the vote, regardless of the victor, Reuters reported.

Bank of Mexico head Agustín Carstens. (PHOTO: gcmx.mx)

Bank of Mexico head Agustín Carstens. (PHOTO: gcmx.mx)

“Either way, we the authorities would need to adjust our policy position if it’s necessary,” he added.

Carstens did not provide details of the contingency plan.

Trump’s threats to tear up a trade deal with Mexico, build a massive border wall and his attacks on U.S. companies investing in the country have spooked investors, hurting the peso currency.

On Sept. 30 Carstens likened a Trump win to a hurricane hitting Mexico, and said a victory for Democratic candidate Hillary Clinton would be better for the economy.

Senior officials from the Bank of Mexico as well as the finance and economy ministries were holding discussions on Wednesday about what impact the U.S. election could have, an official said ahead of the talks, speaking on condition of anonymity.

Maintaining Mexican inflation close to its target rate would be the central bank’s “guiding principle” going forward, Carstens said. The bank targets inflation of 3 percent with a one percentage point tolerance zone on either side.

Source: reuters.com

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