Mexico’s central bank raised its key interest rate to a record high as inflation hovers at a 21-year high, but pulled back on a hawkish timetable for monetary tightening through the end of the year.
Banxico, as Mexico’s central bank is better known, hiked interest rates for the second straight time by 75 basis points, taking its key rate to 8.5%, a rate that all 24 economists polled by the agency had forecast. Bloomberg. Never since 2008, when the bank started setting inflation targets, has monetary policy been so tight, with the previous all-time record for interest rates being 8.25%.
The move to withdraw the guidance for Banxico’s next moves is interpreted by analysts as a signal to investors to expect smaller interest rate increases in the future.
Bank of America’s expert estimate for Mexico and Canada is that Banxico will move into its next session to a new increase of 50 basis points, with a second scenario a rise of 75 basis points.
Source: Capital
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