Mexican central banker says rate hiking cycle may not be over

6/2/2017 Reuters

banco de mexicoMexican central bank deputy governor Javier Guzman said on Friday that it was “impossible to say” whether the bank’s rate hiking cycle was over after it unexpectedly pushed its benchmark interest rate last month up by 25 basis points to an eight-year high of 6.75 percent.

“We are watching the evolution of demand pressures, and if necessary we will be reacting,” Guzman told Reuters in an interview outside a meeting organized by the U.S.-Mexico Chamber of Commerce in New York.

Guzman said it was possible the economy would require more hikes in 2017. But he said he expected Mexico’s inflation to begin declining significantly in the second half of the year.

Price shocks from the start of the year, including a sharp increase in gasoline prices, drove Mexico’s inflation rate to 6.17 percent in the year to mid-May, its fastest annual pace in more than eight years.

The country liberalized state-controlled gasoline prices at the start of the year, driving them up as much as 20 percent.

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