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Mexico: Central bank raises rates as expected

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 17, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Córdoba) - The central bank of Mexico (Banxico) rose the key rate by 25 basis points to 3.25% as expected. The Mexican peso is steady in market. USD/MXN currently trades at 17.00, after peaking at 17.14. On Monday it reached record highs at 17.47.

    Despite low levels of inflation, Banxico decided to raise rates because of what the Federal Reserve did yesterday. The Mexican central bank is expected to follow what the FED does in order to avoid any sharp depreciation in the exchange rate.

    It is the first rate hike in Mexico since 2008 when it reached levels above 8% in order to stop money outflows during the global financial crisis. In 2009 it started to lower the rate. The previous move was a rate cut in June 2014 to 3%.

    Banxico now joins the central banks of Peru, Colombia, Chile and Brazil that had been rising rates amid higher inflation pressures.
    For more information, read our latest forex news.

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