The Bank of Mexico raised the benchmark interest rate by one-quarter percentage point to 4.75 percent on Thursday in a 4:1 split vote on concerns over short-term inflation.
The central bank of the second-largest Latin American economy, also known as Banxico, revised inflation in the latest inflation forecast due to “global inflationary pressures and production constraints”.
Mexican consumer prices rose 0.42 percent during the first half of September to reach annual inflation of 5.87 percent, already up from August’s 5.59 percent, official data showed last week.
Banxico still expects inflation to be short-lived and set to decline after the fourth quarter of 2021.
Banxico said annual headline and core inflation projections are expected to decline, particularly for a year and beyond, and expected to converge to its 3 percent target by the end of the forecast horizon.
“Banxico’s decision to raise was in line with our expectations and was accompanied by a further upward revision of inflation forecasts for the first half of 2022. But the emphasis of the statement remains on the temporary nature of price pressures and suggests that Banxico doesn’t see much further monetary tightening, said Charles Seville, America’s sovereign co-head at Fitch Ratings.
This is the third time since 2018 that Banksiko has raised the benchmark interest rate, after raising rates at the same pace in June and August.
Reuters contributed to the report.
This News Originally From – The Epoch Times