The facade of the Bank of Mexico building is pictured in downtown Mexico City, Mexico, on Feb. 28, 2019. (Daniel Becerril/Reuters)
The Bank of Mexico raised the benchmark interest rate by one-quarter percent to 4.75 percent in a 4:1 split vote on Thursday over short-term inflation concerns.
The central bank of the second-largest Latin American economy, also known as Banxico, revised upward the inflation in the latest inflation forecasts because of “global inflationary pressures and bottlenecks in production.”
Mexican consumer prices during the first half of September rose 0.42 percent to reach annual inflation of 5.87 percent, already edging above the 5.59 percent clocked for August, official data showed last week.
Banxico still expects inflation will be short-term and is going to decrease after the fourth quarter of 2021.
Banxico said that annual headline and core inflation projections are expected to decrease, particularly for one year and beyond, and to converge to its 3 percent target by the end of the forecast horizon.
“Banxico’s decision to raise was consistent with our expectations and accompanied by yet another upward revision to inflation forecasts for the first half of 2022. But the emphasis of the statement remains on the transitory nature of price pressures and suggests Banxico does not see a lot more monetary tightening ahead,” said Charles Seville, Americas Sovereign co-head at Fitch Ratings.
This is the third time Banxico raised the benchmark interest rate since 2018 after it raised the rate in June and August at the same pace.
Reuters contributed to the report.
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Allen Zhong is a long-time writer and reporter for The Epoch Times. He joined the Epoch Media Group in 2012. His main focus is on U.S. politics.
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