The Bank of Mexico applied this Thursday its second consecutive rise of 75 points to the interest rate, expected by the market, with which the benchmark reached its highest level in history: 8.5 percent.

Since the Central Bank adopted the interest rate as an operational target in 2008, the previous benchmark record was 8.25 percent, which was reached in August 2008 and December 2018.

The increase in the rate was taken unanimously by the Governing Board, which pointed out that the conduct of monetary policy faces "greater challenges" represented by global financial conditions, geopolitical conflicts and inflationary pressures that have been accumulating during the COVID-19 pandemic.

Check here: Appreciation of the Mexican peso and how the Fed influences

On this occasion, Banxico did not 'open the door' to a new increase of 75 basis points to the reference rate, since it stated that it "will assess the magnitude of the upward adjustments in the reference rate in its next meetings in accordance with the prevailing circumstances." ”.

This is the tenth increase in a row to the rate since Banxico began its upward cycle in 2021, the year in which inflation left the institution's target range (3 percent +/- one percentage point) after spending months ' controlled' by the effect that the COVID pandemic had on the demand for products.

Since June of last year, the institution has increased its rate by 450 basis points, and the latest hikes have been among the most aggressive by the Central Bank in the context of inflation at levels not seen in decades.

In fact, Banco de México upgraded its INPC forecasts for both 2022 and next year due to higher-than-anticipated pressures for headline and core inflation.

For this year, the institution expects inflation to close at 8.1 percent (its previous forecast was 7.5 percent), while it expects the index to open 2023 with levels of 7.1 and 5 percent in the first two quarters.

Of interest: Honeywell Centro expands Engineering Center in CDMX

The institution continues to expect inflation to return to its target range until the July-September 2023 period, at a level of 3.7 percent.

The new rate hike comes after the United States Federal Reserve (Fed) did the same at the end of July and raised its rate by 75 basis points, placing its benchmark in the range of 2.25-2.5 percent.

That decision by the Fed put "pressure" on Banxico to raise the benchmark by the same magnitude and thus maintain an attractive rate differential that prevents a greater outflow of foreign capital flows, mainly in the debt market.

In Solili you can consult industrial warehouses available in Monterrey, Saltillo and Guadalajara

Original note