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ECONOMY

Mexico’s central bank hikes interest rates

Mexico’s central bank hikes interest rates

Rates have been raised to the highest since 2009

IFM Correspondent

November 22, 2016: Mexico's central bank raised its key interest rate on November 17 after Donald Trump’s victory caused the peso to fall to record lows. The Banco de Mexico raised its key rate (MXCBIR=ECI) 50 basis points (bps) to 5.25 percent, its highest since May 2009.

"What we're trying to do is reach a balance, which is not easy, between not lagging behind reality and on the other hand, neither do we anticipate news (or) speculation that might not be right and that could impose additional costs on the economy that aren't necessary to impose," Agustin Carstens, Governor of Mexico’s central bank, explained.

The uncertainty surrounding Trump’s presidency and his prospective policies with regard to Mexico caused the peso to fall.

However, the rate hike is expected to calm the volatility in the financial markets. The bank also raised interest rates in an attempt to control inflation, and many analysts expected this move.

Carstens said in an interview recently that the central bank does not rule out the option of raising the interest rate once again this year if the need arises.


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