Bank of Mexico Raises Interest Rates for Third Time in 2016

September 30, 2016

As a U.S. presidential candidate with hostile intentions regarding relations with Mexico, Donald Trump is already influencing Mexican monetary policy the Bank of Mexico increased its policy interest rate to 4.75% from 4.25%. This was the third 50-basis point central bank rate hike since February and completely reverses easing undertaken between March 2013 and October 2014. Even though inflation of 2.4% still lies below the medium-term target of 3.0% and GDP contracted in in the second quarter, monetary officials feel compelled to take preemptive action to support the vulnerable peso, counter potential price pressure should Trump win, and anchor price expectations.

Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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