Mexico raises interest rate to new record of 11%

By Ovunc Kutlu

ISTANBUL (AA) - Mexico increased its key interest rate Thursday by 50 basis points to a new record high of 11% to fight inflation.

The move was above market expectations of a rate hike of 25 basis points, while it is the 14th upward rate adjustment by the bank since June 2021.

The Bank of Mexico hiked its key interest rate by 50 basis points Dec. 15 to a then-record high of 10.50%, which followed its four consecutive rate hike of 75 basis points.

"Global inflation remains high, although headline inflation decreased in a large number of economies due to lower pressures on energy prices," Banco de Mexico’s Governing Board said in a statement. "Most central banks, including the US Federal Reserve, continued raising their reference rates and announced that they will remain high for an extended period."

The central bank said world economic growth moderated during the fourth quarter as the outlook for 2023 continues to imply a deceleration.

It added that some key global risks are associated with the coronavirus pandemic, persistence of inflationary pressures, intensification of geopolitical turmoil and tighter monetary and financial conditions.

Mexico's annual consumer inflation rose 7.91% in January, gaining pace from December's 7.82%, according to figures released by its national statistics agency, INEGI.

Consumer prices rose 0.68% in January, sharply up from the monthly increase of 0.38% in December, said INEGI.