MEXICO’S central bank announced yesterday another sharp increase in its benchmark interest rate to try to bring down the highest inflation in more than two decades.

The governing board’s decision to raise the interbank rate by three-quarters of a percentage point to 8.5% was unanimous, the Bank of Mexico said.

It was the 10th consecutive hike and the second in a row of such a magnitude.

“Accumulated inflationary pressures derived from the pandemic and the war (in Ukraine) continue to affect general and underlying inflation,” the central bank said in a statement.

Like many countries Mexico is grappling with rising consumer prices that are increasing the cost of living.

Inflation in Latin America’s second-largest economy reached 8.15% year-on-year in July – the highest since 2000, according to official figures.

That was well above the central bank’s target of around 3%

The Bank of Mexico signalled that the size of any further interest rate increase in would depend on whether inflation eases.

“The governing board will assess the magnitude of upward adjustments in the reference rate at its next meetings according to the prevailing circumstances,” it said. – AFP, August 12, 2022.