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Bank of Mexico governor says pace of hikes may change as needed -Breaking


© Reuters. After an interview with Reuters, Mexico’s Central Bank Governor Victoria Rodriguez Ceja takes a photograph after posing for a picture at the annual bank convention in Acapulco (Mexico), March 25, 2022. REUTERS/Javier Verdin

By Anthony Esposito

ACAPULCO (Mexico) – Mexico’s central bank governor said Friday that the Bank of Mexico doesn’t have to follow the U.S. Federal Reserve’s anticipated interest rate hike path. It can adjust monetary policy as needed to reduce inflation.

Banxico is the name of the central bank. The board members voted unanimously for a 50-basis point increase in the benchmark interest rate to 6.5%. It was the seventh successive hike. This was the third consecutive 50-basis points increase.

Victoria Rodriguez, the new Banxico CEO, stated that she is most concerned about the inflation. She spoke out at the Acapulco annual bank conference.

It was noted that the Fed’s policy path is an important variable for Mexico, but not the sole one. Inflation has also been increasing for the past 15 months.

Rodriguez explained that Rodriguez did not believe it was a coincidence that the Fed had already decided to increase its expected rates one at a time.

Although the inflation rate was slightly higher than that of the past two weeks but over twice the target rate of Banxico of 3%, it reached 7.29% during the first half March. There is a tolerance of one point between the target and actual inflation at Banxico.

“We are not sure if the rate of rate rises will continue at this speed or something else. Rodriguez stated that it will be necessary in order to meet our mandate for a target inflation of 3%.

Rodriguez predicts that inflation will reach its peak in 2022’s first half, then fall to the targeted level by 2024’s first quarter.

Following Russia’s invasion, however, there have been increased risks and uncertainties, which has fueled price increases for energy and grains.

Rodriguez said that inflation could have a substantial impact. Rodriguez added, “We’ll be watching what happens and taking the appropriate steps if there is an effect on inflation.”

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