MEXICO CITY, Feb 19 (Reuters) - Mexico's central bank will remain very vigilant to the country's exchange rate and output gap, bank governor Agustin Carstens said on Thursday, adding that any tightening of U.S. monetary policy could affect capital flows to Latin America's No. 2 economy.
Carstens also said that the U.S. Federal Reserve minutes from its Jan 27-28 policy-setting meeting, released on Wednesday, had a more cautious tone.
"We're going to be very vigilant to what happens to the exchange rate, and to the output gap," Carstens said on local radio. The output gap refers to the difference between the economy's current performance and its potential.
On Wednesday, Mexico's central bank revised down its growth outlook for this year and next after a sharp drop in oil prices spurred budget cuts and dampened the outlook for an opening of the country's energy sector.
The oil price slump has weighed on the peso since late last year, dragging it to a six-year low this month. The oil slump has also forced the government to cut spending and curbed expectations that Mexico will soon see a tide of investment from its energy overhaul.
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Carstens also said that the U.S. Federal Reserve minutes from its Jan 27-28 policy-setting meeting, released on Wednesday, had a more cautious tone.
"We're going to be very vigilant to what happens to the exchange rate, and to the output gap," Carstens said on local radio. The output gap refers to the difference between the economy's current performance and its potential.
On Wednesday, Mexico's central bank revised down its growth outlook for this year and next after a sharp drop in oil prices spurred budget cuts and dampened the outlook for an opening of the country's energy sector.
The oil price slump has weighed on the peso since late last year, dragging it to a six-year low this month. The oil slump has also forced the government to cut spending and curbed expectations that Mexico will soon see a tide of investment from its energy overhaul.
yahoo.com
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