Bank of Mexico Increases its Key Interest Rate by 25 Basis Points to 4.5 Percent

Posted on 08/12/2021

The Banco de Mexico (Bank of Mexico) raised its key interest rate by 25 basis points to 4.5% in a bid to contain price pressures. It was a three-to-two vote in favor of a rate hike. More rate increases are expected in 2021 even though two of its five-member board voted to leave borrowing costs unchanged. The central bank (also referred as Banxico) targets inflation of 3%, with a one percentage-point tolerance range above and below that.

“Although the shocks that have increased inflation are expected to be transitory, due to their variety, magnitude, and the extended horizon over which they have affected it, they may pose risks to the price formation process,” the bank said.

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