Mexico City (awp / afp) – The Central Bank of Mexico raised its key rate by 0.75 points on Thursday, bringing it to 8.5% in the face of galloping inflation which reached its highest level in more than two decades.
“The accumulated inflationary pressures stemming from the pandemic and the conflict (in Ukraine) continue to affect headline inflation and core inflation,” the monetary institute said in a statement.
Core inflation excludes more volatile prices, such as energy and food.
This is the 10th consecutive increase in Banxico’s benchmark rate to contain soaring consumer prices, a rise however expected by analysts of the second largest economy in Latin America.
Annual inflation reached 8.1% in July, its highest level since December 2000 when it was 8.9%. This figure is well above the central bank’s 3% target (plus or minus one percentage point) but “convergence (of inflation) towards the 3% target should be reached in the first quarter of 2024 “, estimates the Mexican central bank.
Banxico warns, however, that further rate hikes could occur before the end of the year: “the Board of Governors will assess the extent of the upward adjustments to the benchmark rate at its next meetings depending on the prevailing circumstances” .
afp/rp