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Economy & Business - July 2021

MEXICO: Banxico decision to raise interest rates highlights inflation concerns

Mexico’s national statistics institute (Inegi) reported on 24 June that year-on-year inflation during the first fortnight of June reached 6.02%, double the 3% target set by the central bank (Banxico), and almost twice the 3.17% rate recorded during the same period of 2020. Within hours of Inegi’s report, Banxico decided to increase its benchmark interest rate by 25 basis points from 4% to 4.25%, underlining its concern with rising prices. This was the first increase of Banxico’s interest rate since 2018 and one that according to a Bloomberg report published on 29 June, took many analysts by surprise, as none of the 23 private economics it had interviewed had expected it.

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