Mexico seen raising interest rates after gasoline price hike

2/9/2017 Reuters

increase bar chartMexico’s central bank is expected to raise interest rates on Thursday after a jump in inflation due to a double-digit gasoline price hike and a weak exchange rate.

The Banco de Mexico is likely to raise its benchmark interest rate on Thursday to 6.25 percent from the 5.75 percent rate it set in December’s meeting, according to 14 of 18 analysts polled last week by Reuters.

“Inflation expectations are clearly rising,” Nomura analyst Benito Berber wrote in a note on Wednesday, noting the central bank had consistently delivered 50 basis point hikes “when it was needed.”

Mexico’s annual inflation rate is expected to have shot up in January to 4.70 percent, which would be its fastest pace in over four years, driven by a 14 percent increase in regular gasoline prices at the start of the month.

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