Wed | Sep 26, 2018

Mexico raises benchmark interest rate

Published:Sunday | November 20, 2016 | 12:00 AM


Mexico's central bank decided Thursday to raise its interbank interest rate by one-half per cent to 5.25 per cent, citing "a more complex world economic panorama, caused among other things by the US elections."

The decision was the second time in as many months the Bank of Mexico has raised the rate.

In September, it raised the rate a half-point to 4.75 per cent, seeking to shore up a weak peso.

The volatile peso has depreciated significantly against the US dollar.

Some analysts had been expecting a larger increase, given uncertainty surrounding the US presidential election of Donald Trump.

Trump has pledged to renegotiate the North American Free Trade Agreement, deport millions of migrants and build a border wall.

The peso's interbank exchange rate weakened from 20.34 to US$1 to 20.41.

Financial consulting firm Banco Base said on Thursday it is unlikely that the peso stabilises in coming days due to expected changes in United States monetary policy and uncertainty about the incoming administration of Donald Trump.