Home ›› 12 Jun 2022 ›› World Biz
Bank of Mexico Deputy Governor Jonathan Heath said on Friday that the central bank is likely to raise its benchmark interest rate by 75 basis points at its next meeting scheduled for June 23, according to local media.
"Obviously we have to vote ... In my personal opinion, there will be a majority and we're going to see an increase of 75 base points," Heath said during a forum in the Mexican state of Quintana Roo organized by Mexico's Stock Exchange.
Banxico, as the central bank is called, has an inflation target of 3per cent plus or minus one percentage point and has increased its benchmark interest rate by 300 basis points since mid-2021 to its current level of 7per cent.
Last week, Banxico said it is willing to act more forcefully on monetary policy if needed in order to bring inflation back down to target, and could implement a rate hike of 75 basis points at its next monetary policy meeting.
"The fundamental discussion is going to be whether in August we increase by 75 (basis points) again or go back to a 50 (basis points hike)," said Heath.
Inflation rose 7.65per cent in the 12 months through May, according to data published by the national statistics agency on Thursday, far above the central bank's target.
Heath said that inflation would likely be even higher if not for a government anti-inflation plan, especially subsidies for domestic gasoline and diesel.
"We could be facing inflation of 10per cent without this federal policy," he said.
Deputy Finance Minister Gabriel Yorio told Reuters in April that Mexico will use the extra revenue it collects from higher oil prices to subsidize domestic gasoline and diesel prices, and that without the subsidy annual inflation could be some two percentage points higher.
