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Mexico Raises Key Rate for Second Meeting

In a shift from their last meeting, policymakers indicated that the peso—in particular, the inflationary effect of its future potential weakness—would now be the first factor among those they’re watching.

By Eric Martin, Bloomberg | Updated on February 08, 2018

Mexico’s central bank raised its key interest rate as expected for a second straight meeting and signaled it will prioritize the peso’s inflation implications rather than moves by the Federal Reserve for its future decisions.

Banco de Mexico’s board voted unanimously to lift borrowing costs a quarter point to 7.5 percent Thursday, a move forecasted by 23 of 26 economists surveyed by Bloomberg. Three expected no change. The decision came after consumer prices in December climbed 6.77 percent from a year earlier, more than double the central bank’s 3 percent goal and the fastest pace in 16 years.

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