Mexico cenbank to evaluate magnitude of rate hikes based on prevailing conditions, minutes show

Minutes from Mexico’s central bank Aug. 11 monetary policy meeting published Thursday underscored the possibility of interest rate hikes at future meetings at to-be-determined magnitudes.

Banxico, as Mexico’s central bank is known, raised the country’s benchmark interest rate by 75 basis points at the August meeting in an effort to slow rising inflation. It has increased rates by a total of 450 basis points over its last 10 monetary policy meetings.

“The board added that it will assess the magnitude of the upward adjustments in the reference rate for its next policy decisions based on the prevailing conditions,” the minutes said.

At the meeting, board members said expectations for 2022 headline and core inflation rose again.

Data from Mexico’s statistics agency showed Wednesday that annual headline inflation rose to 8.62% in the first half of August, far above Banxico’s target of 3%, plus or minus one percentage point.

While bank members added that consumption continued to recover during the May-June period, an uncertain environment for economic recovery prevails.

Most board members projected inflation would not converge to the bank’s 3% target until the first quarter of 2024.