Central Bank of Mexico Raises Interest Rates for 7th Time

The Bank of Mexico (Banxico) has raised interest rates for the seventh consecutive time as it has also raised its inflation forecast this year under pressure from the Covid-19 pandemic and geopolitical conflict.

Banxico said in a statement on Thursday that its Board of Governors unanimously decided to raise the overnight interbank interest rate (the interest rate banks use or borrow from and lend to each other) by 50 basis points to 6.5% as of Friday reports Xinhua news agency. 

The bank said, “Global inflation continued to rise, driven by bottlenecks, and high food and energy prices, adding to the shocks from the pandemic are pressures stemming from the geopolitical conflict.”

Banxico has raised its inflation forecast for the end of this year to 5.5% from 4% projected in February while increasing slightly for 2023 from 3.1% to 3.2%. The central bank has started the current cycle of rate hikes in June 2021, after rising inflation.