© Reuters. FILE PHOTO: The logo of Mexico’s Central Bank (Banco de Mexico) is seen at its building in downtown Mexico City, Mexico August 9, 2022. REUTERS/Henry Romero/File Photo
MEXICO CITY (Reuters) – The Bank of Mexico is expected to raise its key interest rate to a record 9.25% this week, a Reuters poll showed Monday, following in the steps of the U.S. Federal Reserve’s recent 75 basis points hike in a bid to tackle stubbornly high inflation.
All 20 analysts polled expect Banxico, as the central bank is known, to raise its benchmark rate on Thursday by three-quarters of a percentage point from 8.50%, in what would be the bank’s third-consecutive increase of this size.
“In an environment in which pessimism in the financial markets continues, given expectations of greater tightening by the Fed, we believe that Banxico will continue to try to remain cautious, contributing to greater local stability,” said Grupo Financiero Banorte.
Banxico has raised its target rate by 450 basis points this current hiking cycle, which began in June 2021, as inflation has blown past the bank’s target rate of 3%, plus or minus one percentage point.
Inflation in Mexico has continued to rise to decades-high levels. Annual inflation in Latin America’s second-largest economy hit 8.76% in the first half of September, official data showed last week.
President Andres Manuel Lopez Obrador said Friday the government would announce new measures to tame inflation following an agreement with companies to maintain prices of basic food items.
Last week, the Fed announced its third-straight hike of 75 basis points, and signaled more increases of the same size may well be needed.
Mexico’s central bank will publish its monetary policy statement Thursday at 1 p.m. local time (1800 GMT).
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