February 26, 2020 / 7:30 PM / a month ago

UPDATE 1-Mexico central bank cuts 2020 growth outlook, cites coronavirus risk

(Adds comments from central bank, background, details)

MEXICO CITY, Feb 26 (Reuters) - Mexico’s central bank on Wednesday trimmed its 2020 economic growth forecast and hiked its inflation view, saying projections were shrouded in uncertainty because it is unclear how the fast-spreading coronavirus will impact global growth.

The Banco de Mexico, in its quarterly economic report, lowered its growth outlook for this year to between 0.5% and 1.5%, from a prior estimate of 0.8% to 1.8%.

“This outlook anticipates a more gradual recovery of domestic demand throughout the forecast horizon, in a context in which the global economy continues showing weakness and U.S. industrial production expectations have been revised downwards once again,” the bank said.

The bank raised its outlook for annual headline inflation for the fourth quarter of this year to 3.2%, up from 3.0% previously.

Inflation expectations have been stoked by the government’s decision in December to raise the daily minimum wage by 20%, the biggest increase in more than four decades and the second major one in as many years.

Higher-than-forecast agricultural and livestock goods prices are also fanning inflation, the bank said. (Reporting by Abraham Gonzalez; writing by Anthony Esposito; editing by Drazen Jorgic and Leslie Adler)

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