Mexico raises interest rate to record 10.50%

ISTANBUL

Mexico has hiked its key interest rate by 50 basis points to a record high of 10.50%.

The decision was expected and follows four consecutive rate hikes of 75 basis points by the Bank of Mexico. It is also the 13th upward adjustment by the bank since June 2021.

“World economic activity recovered slightly during the third quarter, although the outlook for 2023 continued deteriorating,” read a statement.

“Global inflation remains high, while in some economies headline inflation decreased in response to lower pressures on food and energy prices,” it added.

It said some of the key global risks are associated with the COVID-19 pandemic, persistence of inflationary pressures, geopolitical turmoil, and tighter monetary and financial conditions.

The statement also hinted at another hike in the coming months.

“The Board considers it will still be necessary to raise the reference rate in its next monetary policy meeting,” the bank said.

“Subsequently, it will assess if the reference rate needs to be further adjusted as well as the pace of adjustments based on the prevailing conditions.”

Mexico’s annual consumer inflation eased to 7.8% in November, a significant slowdown from October’s 8.41% and 8.7% in September and August, which was the highest level hit since December 2000.​​​​​​​