The Central Bank of Mexico (Banxico) increased the country’s benchmark interest rate by 50 basis points, from 6.00% to 6.50% per year. The decision, released this Thursday (24) in a statement, was taken unanimously, according to the BC.
The monetary authority highlighted that there was an increase in inflationary projections, based on greater pressure coming from bottlenecks in the supply chain and from food and energy prices.
With expectations rising, inflation in Mexico is now only expected to reach the target of 3% per year in 2024, predicts Banxico.
According to the BC, consumer inflation will rise 6.4% in the first quarter of 2022 and will moderate to a high of 4.0% in the last quarter of the year.
For inflationary projections, however, there are several risks of ups and downs, stressed the monetary entity.
On the upside, she cites the possible persistence of strong implied inflation, external pressures from the agricultural and energy sectors due to the war in Ukraine and exchange rate depreciation.
Downside risks include a possible reduction in tensions in Eastern Europe, a greater-than-expected negative effect from the negative Mexican GDP gap, lower-than-expected energy prices and currency appreciation, Banxico said.
“The balance of risks in relation to the expected path for inflation over the projection horizon has deteriorated and remains biased upwards,” added the BC.
Source: CNN Brasil
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