La Jornada – BdeM applies an unprecedented rate hike up to 7.75%

La Jornada – BdeM applies an unprecedented rate hike up to 7.75%

Mexico City. The Bank of Mexico (BdeM) unanimously applied on Thursday an unprecedented increase of 0.75 percent to its reference rate, the rate that determines the cost of credit with which businesses and households are financed, which was at 7.75 percent, with the aim of containing high inflation.

This is the first time that Mexico’s central bank has applied a rate increase of this magnitude to its reference rate, a move most analysts expect, as it is in line with the same rate increase that the Federal Reserve achieved a few days ago. . (Federal Reserve) of the United States.

In the statement announcing the decision of its last monetary policy meeting, the BdeM Board of Directors highlighted the inflationary pressures facing the country, which announced that it intends in the following decisions to “continue to increase the reference rate and the value of the act. With the same force in case of need.”

He noted that in the face of higher-than-expected inflationary pressures, headline inflation forecasts were revised upwards until the third quarter of 2023 and core inflation was revised upwards for the entire horizon, although convergence to the 3 percent target is still expected in the quarter. the first of 2024.

However, this outlook is subject to upside risks, such as core inflation continuing at high levels; External inflationary pressures caused by the epidemic, increasing pressures on agricultural and energy prices due to geopolitical conflict, exchange rate depreciation and cost pressures.

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