Mexico’s central bank announced another increase in its benchmark interest rate

Mexico’s central bank on Thursday announced another increase in its benchmark interest rate to a record high of 11 percent, saying inflation was taking longer than expected to fall.

The governing board’s decision to raise the interbank rate by half a percentage point was unanimous, the Bank of Mexico said.

It was the 14th consecutive hike aimed at slowing consumer price rises that reached the fastest pace in more than two decades last year, reports BSS.

“Among key global risks are those associated with the pandemic, the persistence of inflationary pressures, the intensification of geopolitical turmoil, and tighter monetary and financial conditions,” a statement said.

The central bank raised its inflation forecasts, saying that headline inflation in Latin America’s second-largest economy had crept back up to 7.91 percent in January.

It expects inflation to remain above the official 3.0 percent target through 2024.

The balance of risks for inflation “remains biased to the upside,” it said, but also signaled that it might slow the pace of interest rate increases at its next meeting.

“The board considers that, given the monetary policy stance already attained and depending on the evolution of incoming data, for its next policy meeting, the upward adjustment to the reference rate could be of lower magnitude,” it said.

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