MEXICO CITY (Reuters) – The Bank of Mexico is expected to raise its key interest rate to a record 9.25 percent this week, a Reuters poll showed on Monday, following moves by the U.S. Federal Reserve to raise recently 75 basis points in an attempt. Tackling stubbornly high inflation.
All 20 analysts polled expected Banxico, as the central bank is known, to raise its benchmark rate on Thursday by three-quarters of a percentage point from 8.50%, in what would be the third consecutive increase of that size for the bank.
“In an environment where financial market pessimism persists, given expectations of further Fed tightening, we believe Banxico will continue to attempt to exercise caution, contributing to increased domestic stability,” said Grupo Financiero Banorte.
Banxico raised its target rate by 450 basis points in this current stroll cycle, which began in June 2021, as inflation exceeded the bank’s target rate of 3%, plus or minus one percentage point.
Inflation in Mexico has continued to rise to high levels for decades. Official data released last week showed annual inflation in Latin America’s second-largest economy reached 8.76% in the first half of September.
President Andres Manuel Lopez Obrador said Friday that the government will announce new measures to curb inflation after an agreement with companies to maintain prices of basic foodstuffs.
Last week, the Fed announced its third consecutive hike of 75 basis points, and indicated that further increases of the same size may be needed.
Mexico’s central bank will publish its monetary policy statement on Thursday at 1 pm local time (1800 GMT).