Banxico to Hike Interest Rates 75 Basic Points

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Although the next meeting of the Central Bank of Mexico (Banxico) is not due until Thursday, June 23, Banxico’s deputy governor, Jonathan Heath, on Friday, June 10, said that its board members will most likely increase the base interest rate by 75 points during that next monetary policy vote.

Heath said that the increase, which is highly unprecedented and comes after seven straight interests hikes in a row, would be necessary in order to have a solid monetary stance consistent with Mexico’s skyrocketing inflation

During it last board meeting, Banxico’s governing board increased the key interest rate by 50 points in the face the surging price escalations.

“Obviously, we still have to vote on the matter,” Heath said. “And I am only one of five (board members), but I can almost tell you for certain that there will be a majority and we are going to see this increase of 75 basic points. The fundamental discussion is going to be whether in August we increase it by 75 points again or go back to 50 points.”

Banxico’s reference rate currently stands at 7 percent.

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