MEXICO’S central bank raised its benchmark interest rate yesterday for a fourth consecutive time to try to curb inflation as the pandemic-hit economy rebounds from a deep recession.

The governing board decided to increase the interbank rate by 25 basis points, to 5.0%, the Bank of Mexico said in a statement.

“Global economic activity continued to recover during the third quarter, although at a slower pace and with differences between countries due to the evolution of the pandemic and spending stimulus,” it said.

“Global inflation continued to rise, driven by bottlenecks in production, spending stimulus… increases in food and energy prices, as well as by the reopening of some services,” it added.

Inflation in Mexico reached 6.24% in the 12 months to last month, more than double the central bank’s target of around 3% and the highest in almost four years.

While the causes were expected to be “mainly transitory,” they have affected a wide range of products and risk raising expectations of further price increases, the central bank said.

It is Mexico’s fourth interest rate hike since June, when the central bank raised official borrowing costs for the first time in more than two years.

The monetary tightening follows a series of cuts to boost Latin America’s second-largest economy, which shrank 8.5% last year, the worst slump in around nine decades. – AFP, November 12, 2021.