For immediate release: October 23, 2006
Phone: (214) 922-5307
Mexico’s Rapidly Modernizing Financial System Subject of Dallas Fed’s Economic Letter
DALLAS—Mexico’s remarkable efforts developing world-class financial markets will have wide-ranging effects on the nation’s economy, according to the October issue of the Federal Reserve Bank of Dallas’ Economic Letter.
In “Laying the Foundation for a Mortgage Industry in Mexico,” international financial analyst Ed Skelton uses Mexico’s booming housing market and burgeoning securitization market as evidence of the dramatic progress in the country’s financial system.
Modern financial markets enhance economic well-being in several ways:
- Boosting capital flows, enhancing savings and improving efficiency.
- Allowing families to accumulate equity over time via mortgage payments.
- Creating a more liquid housing market, thus making relocation easier and promoting household mobility.
- Encouraging individuals to report income and pay taxes, creating a more formal economy.
Securitization’s growth offers the most impressive example of Mexico’s financial modernization as this practice frees up funds, reduces borrowing costs, and leads to a more secure and efficient financial system, Skelton finds.
Mortgage lenders in Mexico are now offering fixed-rate, 20-year mortgages at roughly 9 percent, with a required down payment of 10 percent, according to Skelton.
“Ten years of economic stability, declining inflation, financial market reform and banking sector competition have greatly enhanced lenders’ ability to offer longer-term loans at reasonable rates,” he writes.
A robust derivatives market, vigorous corporate bond market and rapid credit growth offer further evidence of Mexico’s remarkable financial system success, Skelton finds.
The October 2006 issue of Economic Letter can be found at www.dallasfed.org.
For immediate release:
October 30, 2006
Dallas Fed Trimmed Mean PCE 1.7% in September
DALLAS—The Trimmed Mean PCE inflation rate for September was 1.7 percent at an annualized rate, according to the Federal Reserve Bank of Dallas.
The overall Personal Consumption Expenditures inflation rate for September, released by the Bureau of Economic Analysis, was an annualized –3.7 percent, while the inflation rate for PCE excluding food and energy was an annualized 2.1 percent.
For the 12-month period ending in September, the Trimmed Mean PCE inflation rate was 2.6 percent. Over the same 12 months, the price index for overall PCE rose 2.0 percent and the price index for PCE excluding food and energy rose 2.4 percent.
The Trimmed Mean PCE inflation rate for the 6-month period ending in September was 2.7 percent, annualized. Over the same 6 months, the price index for overall PCE rose an annualized 2.5 percent and the price index for PCE excluding food and energy rose an annualized 2.4 percent.
The Trimmed Mean PCE inflation rate is an alternative measure of core inflation in the price index for PCE. It is calculated by the Dallas Fed, using data from the BEA.
For more information on the Trimmed Mean PCE, visit www.dallasfed.org.
Next release: November 30
Phone: (214) 922-5307