The Bank of Mexico stepped up the pace of interest-rate increases Thursday after inflation reached a more than 20-year high, prompting the bank to raise its inflation forecasts for this year and next.
The five-member board of governors voted 4-1 to lift the overnight interest-rate target by a half percentage point to 5.5% following quarter-point increases at its previous four meetings.
Deputy Gov. Gerardo Esquivel, who had voted to keep rates unchanged at the previous four meetings, called for a quarter-point increase to 5.25%.
The board “evaluated the magnitude and diversity of the shocks that have affected inflation and the factors that determine it, along with the risk of price formation becoming contaminated, and the challenges posed by the ongoing tightening of monetary and financial global conditions,” the Bank of Mexico said.
Inflation rose to 7.37% in November from 6.24% the previous month, reaching its highest level since January 2001. The central bank, which has an inflation target of 3%, now expects inflation to average 7.1% in the fourth quarter, up from 6.8% previously, and increased its forecasts for 2022.
