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© Reuters. FILE PHOTO: The logo of Mexico’s Central Bank (Banco de Mexico) is seen at its building in downtown Mexico City, Mexico August 9, 2022. REUTERS/Henry Romero/File Photo
MEXICO CITY (Reuters) -The Bank of Mexico hiked its key interest rate on Thursday by 75 basis points to a record 9.25%, in line with forecasts and following in the footsteps of the U.S. Federal Reserve’s own recent three-quarter of a percentage point increase.
The bank’s five board members voted unanimously for the third consecutive hike of this magnitude as inflation remains above a two-decade high.
Banxico, as Mexico’s central bank is called, said its board “will assess the magnitude of the upward adjustments in the reference rate for its next policy decisions based on the prevailing conditions.”
The bank has now raised its target rate by 525 basis points this current hiking cycle, which began in June 2021, as inflation has blown past the bank’s target rate of 3%, plus or minus one percentage point.
Despite Banxico’s monetary tightening, inflation in Mexico has continued to rise to decades-high levels. Annual inflation in Latin America’s second-largest economy hit 8.76% in the first half of September, official data showed last week.
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