* Mexican peso extends slide after historic GDP contraction * Brazil real up, worries remain of fiscal state * U.S. Federal Reserve sets new inflation strategy (Adds comments, bullets; updates prices throughout) By Susan Mathew and Shreyashi Sanyal Aug 27 (Reuters) - The peso fell on Thursday after minutes from the Bank of Mexico's latest meeting showed the board is divided on the path of monetary policy, while other Latin American currencies edged higher. Mexico's currency weakened 1% after hitting 11-week highs in the session, as some board members argued there is less room for further interest rate cuts and others saying they should continue. A day after data showed a historic slide in GDP, numbers on Thursday showed Mexico posted a record trade surplus in July of $6.752 billion as exports of automotive and other manufactured goods gathered steam amid an easing of coronavirus lockdowns. But as imports fell, trade may remain weak the rest of the year, following the contraction of both the global and Mexican economies, FX strategists at Citigroup said. The U.S. Federal Reserve said it will seek to achieve inflation averaging 2% over time, offsetting below-2% periods with higher inflation "for some time," and to ensure employment does not fall short of its maximum level. The dollar gained ground as analysts broke down the announcement. "What's missing here is an articulation of how exactly we're going to get higher inflation," said Roberto Perli, head of Global Policy Research at Cornerstone Macro, Washington. "Even the statement of longer-run goals just says 'we're going to use all of our tools.' But it sounds like the tools are going to be the old tools and those old tools were not successful in producing higher inflation in the past. So why should they be successful this time around?" Brazil's real rose 0.6%. Sentiment remained fragile in Brazil after President Jair Bolsonaro rejected a proposal by Economy Minister Paulo Guedes for a new cash welfare program on Wednesday, highlighting a split between the two and raising speculation about Guedes' departure. But the economy ministry said Guedes will not be announcing his resignation. Keeping the welfare program for the next four months will exact a heavy toll on public finances, said Ronaldo Patah, an emerging markets strategist at UBS. He also warned that suddenly stopping the program could trigger a potentially devastating double-dip recession. Chile's peso edged higher, while the Argentine peso dipped. Argentina's representative told the International Monetary Fund that the country is seeking a new deal solely to pay back around $44 billion it had received under an ill-fated stand-by lending agreement in 2018. Key Latin American stock indexes and currencies at 1947 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1117.13 -0.2 MSCI LatAm 1939.63 -0.49 Brazil Bovespa 100631.01 0 Mexico IPC 37573.30 -0.48 Chile IPSA 3861.56 0 Argentina MerVal 44720.19 -2.425 Colombia COLCAP 1228.35 0.08 Currencies Latest Daily % change Brazil real 5.5725 0.69 Mexico peso 22.1561 -1.02 Chile peso 784.9 0.11 Colombia peso 3806.78 0.59 Peru sol 3.5628 0.19 Argentina peso (interbank) 73.9300 -0.09 Argentina peso (parallel) 135 1.48 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru; additional reporting by Karen Pierog in New York; Editing by Dan Grebler)
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