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Banxico adjusts monetary policy to economic weakness

The Banco de Mexico (Banxico) adjusted “so timely and firm” its monetary policy to achieve convergence of inflation to the target, although the balance of risks to economic growth is skewed to the downside, said the Board of Governors in the minutes of its most recent decision published this Thursday.

The central bank maintained the key interest rate at 8.25% at the end of March amid lower inflationary pressures, a weakened economy and little expectation of new increases in the cost of funding by the Federal Reserve of States United.

Not everyone agrees

While the decision to maintain the reference rate for the second time in a row was unanimous, the deputy governor of the board, Gerardo Esquivel, did not agree with the restrictive tone of the decision statement or the conclusion on the balance of risks for inflation.

Most of the board of Banxico said the expectations of inflation in the medium and long term are being located above the permanent target of 3%, about 3.5%, although in January and February it decreased. In this regard, Gerardo Esquivel argued that “the recent evolution of the various inflation indicators in Mexico described in the document itself, as well as policy changes recently announced by the Federal Reserve and the European Central Bank, opened space to issue a statement with a more neutral tone. ”

All board members reiterated that the balance of risks for economic growth continues to be downward biased and most agreed that the available information suggests that at the beginning of 2019 economic activity continues to show low growth.

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“Preliminary” report notes cartel between BMW, Daimler and VW

German vehicle manufacturers BMW, Daimler and Volkswagen reached agreements to avoid competition in the development of technology to reduce pollutant gas emissions, the European Commission said Friday, reporting a “preliminary” report.

“We fear that this is what has happened in this case and that Daimler, VW and BMW have violated competition rules in the EU,” European Commissioner Margrethe Vestager said in a statement, specifying that manufacturers “now have the opportunity to answer “to Brussels.

The initial findings of the investigation opened in September 2018 suggest that the three car manufacturers participated in a “collusive system” to “limit the development and deployment of emission reduction technologies for new diesel and gasoline vehicles,” he says.

These practices, which took place between 2006 and 2014, were agreed within the framework of technical meetings of car manufacturers called the “Circle of Five” and deprived consumers of buying less polluting vehicles, according to the community executive.

The systems that would have been affected would be selective catalytic reduction (SCR) for diesel engines and Otto Particle Filters (OPF) for gasoline-powered cars, says Brussels, which carried out a series of inspections in 2017.

The Volkswagen group confirmed having received the “statement of objections” from the Commission, to which it will respond after having evaluated it. Daimler, on the other hand, assured that he does not expect a fine from Brussels, since he was the first to admit these practices.

If the companies’ responses fail to convince the Commission, if the cartel is confirmed, it can impose a fine that could reach 10% of its annual turnover worldwide.

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Mexico: Trade agreement with the European Union will be signed in May

The Undersecretary of Foreign Trade of the Ministry of Economy in Mexico, Luz María de la Mora, said that the Government of Mexico could sign the Free Trade Agreement with the European Union next May .

After participating in the 102nd Assembly of the American Chamber of Commerce in Mexico, the federal official pointed out that the intention of said treaty is to enter into force no later than 2021.

She explained that the legal part of the texts in which they are working is currently being revised, which could be ready at the end of April to subsequently carry out the signing of the treaty.

Mexico rejects steel import rules proposed by the US

Moreover, Luz María de la Mora said the government of Mexico expresses its refusal to import quotas of steel proposed by the United States as a measure to ratify the new trade agreement with the US.

“The new Mexican government is clear that the application of measure 232 to steel and aluminum has no merit,” she said.

She noted that Mexico is not a threat to the national security of the United States, because it has a deficit of at least two billion dollars in the steel industry.