Mexico’s Drought Is So Severe It Helped Banxico Turn Hawkish

06/30/2021

Source: Bloomberg

Mexico’s central bank raised an unusual red flag when it upended markets with a surprise interest rate hike last week: drought may pressure farm prices, it warned.

It was the only new item the central bank, known as Banxico, listed among inflation risks the day it lifted borrowing costs for the first time since 2018. The worst drought in decades, according to NASA, may have persuaded policy makers to turn hawkish, central banker Gerardo Esquivel said in a subsequent interview.

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