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Mexico central bank slows pace of interest rate hikes

AFP . Mexico City
01 Apr 2023 00:00:00 | Update: 31 Mar 2023 22:42:29
Mexico central bank slows pace of interest rate hikes

Mexico's central bank on Thursday raised its benchmark interest rate to a new record high, but slowed the pace of monetary policy tightening following signs that inflation is easing.

The increase, to 11.25 per cent, was the 15th consecutive hike aimed at slowing consumer price rises that hit the fastest pace in more than two decades last year.

The quarter-percentage-point hike was the smallest since the current round of monetary tightening began in June 2021.

“Since the last monetary policy meeting, annual headline inflation has decreased more than expected,” a central bank statement said, adding that the governing board's decision was unanimous.

“With this action, it slows the pace of interest rate increases and the monetary policy stance adjusts to the trajectory required for inflation to converge to its three percent target within the forecast horizon,” it added.

The central bank expects inflation to gradually decline to 3.1 per cent by the fourth quarter of 2024.

Inflation stood at an annual rate of around 7.1 per cent in the first fortnight of March, it said.

The central bank indicated that it was keeping its options open for its next meeting, saying it would “take into account the inflation outlook, considering the monetary policy stance already attained.”

 

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