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Business

Mexico's central bank increases interest rate, equals record high

MEXICO CITY: Mexico's central bank hiked its benchmark interest rate on Thursday to match a record high of 8.25 percent

Dec 20 2018

MEXICO CITY: Mexico's central bank hiked its benchmark interest rate on Thursday to match a record high of 8.25 percent on the back of market volatility and uncertainty surrounding the policies of leftist President Andres Manuel Lopez Obrador.

Unstable oil prices alongside the evolution of the Mexican peso reflect "the uncertainty surrounding the new administration," said Banco de Mexico (Banxico) in a statement.

The increase of 25 basis points jacked the interest rate to its highest since it reached 8.25 percent in 2008.

For the year, the indicator has risen 100 basis points from 7.25 percent in January.

Banxico had increased its interest rates from 8.0 to 8.25 percent during the 2008 financial crisis.

It's the fourth time this year that Banxico has risen its interest rates, but the first since Lopez Obrador, known by his initials AMLO, assumed office at the start of the month.

The world economy's "lower growth than that registered during the first half of the year" as well as "financial activities in Mexico continuing to display market volatility," were also contributing factors to the decision, Banxico said.

The move comes a day after Mexico's northern neighbor, the United States Federal Reserve, also ratcheted up its benchmark interest rate a quarter-point to a range of 2.25-2.5 percent, despite repeated attacks from President Donald Trump.

Copyright AFP (Agence France-Press), 2018