Mexico’s central bank is poised to conduct interest rate increases independent of how monetary policy is tightened by the Federal Reserve. While the Fed raised its rates less than two weeks ago for the first time in several years, Banxico has had its seventh hike in a row behind it.
Interest rate
The Mexican central bank’s base interest rate was last raised on Thursday, March 24, up half a percentage point to the current 6.5 percent. It is the seventh rate hike in a row. By contrast, the United States central bank has only recently proceeded to raise rates. In doing so, the economies of the US and Mexico are closely intertwined through trade with each other, so one can assume some alignment of monetary policies.
Inflation
“Of course we are primarily interested in the inflation we see around us,” the Governor of Mexico’s Central Bank (Banxico) Victoria Rodriguez said during a banking conference held in Acapulco. While it conceded that Fed policy is one factor for Banxico that influences monetary policy decision-making, the aim is not to copy Fed policy. Inflation in Mexico hit 7.29 percent in March, comparable to inflation in the US. But Mexicans are progressing more vigorously towards it.
