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Mexico central bank seen slowing pace of hikes after peso rally

Mexico’s central bank is expected to raise its benchmark interest rate this week for the fifth meeting in a row, but policymakers are seen slowing the pace of hikes after a rally in the peso, a Reuters poll showed on Monday.

The Banco de Mexico is likely to raise rates on Thursday by a quarter percentage point to 6.50 percent, according to 15 of 24 analysts surveyed by Reuters. Seven thought the bank could deliver a half-percentage point hike, while two saw no move.

Mexico’s central bank raised its benchmark rate in 50-basis point moves in its previous four meetings as the peso tumbled to successive historic lows and threatened to fan inflation.

The peso has rallied back from a record low in January on bets that U.S. President Donald Trump will not impose big tariffs on Mexican exports to the United States, while initial talks about trade have taken a more positive tone.

Mexico’s annual inflation rate rose above 5 percent to a nearly eight-year high in early March, but policymakers say it should trend back toward their 3 percent target by next year.

(Reporting by Miguel Gutierrez and Noe Torres)


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