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Mexico raises rate another 25 bps in wake of Fed hike

Thursday, March 30, 2017 12:41
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(Before It's News)

    Mexico's central bank raised its benchmark target for the overnight interbank rate by another 25 basis points to 6.50 percent to anchor inflation expectations and ensure inflation converges toward its 3.0 percent target while taking into account higher U.S. interest rates.
     The Bank of Mexico (Banxico) has now raised its rate by 350 basis points since the U.S. Federal Reserve began its tightening cycle in December 2015 and by 125 basis points since the November 2016 election of Donald Trump as U.S. President.
     It is Baxico's seventh rate hike since December 2015 but only the second time the rate has been raised by 25 basis points, with all other rate hikes amounting to 50 points. The only other time the rate was raised by 25 points was in December 2015.
     The decision to raise the rate by the central bank's board was unanimous and expected by financial markets following the Federal Reserve's most recent rate hike on March 15.
     Going forward, the central bank said it would closely following the factors affecting inflation and inflation expectations, how changes to the exchange rate may affect inflation, the relative monetary position between the U.S. and Mexico, and the output gap.


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