Dave Graham and Anthony Esposito (NYSE:

MEXICO CITY, (Reuters) – The Bank of Mexico increased its benchmark interest rate 25 basis points in a fourth consecutive policy meeting. It was raised to 5.00% by the governing board. This is in response to concerns about inflation above target.

According to a Reuters poll, the decision is in line with an analyst’s survey. This comes after consumer price inflation rose 6.24% from October through the current year. This was more than double what the central banks aims for at 3%, plus/minus one percent.

The shocks that caused inflation to rise are generally considered temporary. The bank stated in its policy statement that they are uncertain about the future and have affected a broad range of products while having a significant impact on it.

As the Mexican central bank Banxico is well-known, this poses increased risks for the price formation process as well as inflation expectations.

Banxico predicted average headline inflation at 6.8% in the fourth quarter. This is higher than the prior forecast of 6.2%. The core index which excludes volatile items was seen to be at 5.5%, as opposed to a previous view of 5.3%.

Banxico stated that its five members will evaluate the inflationary pressures and all other factors which could have an impact on inflation’s expected trajectory.

Banxico stated that preliminary data had indicated that Mexico’s economy was in decline during the third quarter. But, the country is likely to begin its recovery process starting in the fourth.

“Uncertainty persists, and it is anticipated that slack conditions will be encountered. However, there are significant differences between sectors.”