Inflation in Mexico is under control and the central bank has seen no evidence of second-round effects, but policy makers faced with a number of pressure points need to be very careful, the bank’s Deputy Governor Javier Guzman said.
Data for early March showed annual inflation soared at its fastest pace in nearly eight years. This prompted central bank chief Agustin Carstens to hint at higher interest rates to combat a “bubble” he expected to subside later in the year.
Faced with the peso tumbling to a series of lows until early this year, Mexico increased its benchmark interest rate for the fifth straight monetary policy meeting in March.
But policy makers slowed the pace of hikes from a string of half-percentage point increases to a quarter point after a rally in the currency.