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Mexico’s central bank seen hiking interest rate to 4.50%: Reuters poll

Mexico’s central bank seen hiking interest rate to 4.50%: Reuters poll

© Reuters. FILE PHOTO: The facade of the Bank of Mexico building is pictured in downtown in Mexico City, Mexico February 28, 2019. REUTERS/Daniel Becerril MEXICO CITY (Reuters) – The Mexican central bank is widely expected to raise its benchmark interest rate at its next monetary policy meeting on Thursday, with inflation still well above policymakers’ target level, a Reuters poll showed on Monday.

Seventeen of 19 analysts surveyed said they expect the Bank of Mexico to raise the rate by 25 basis points to 4.50%. One analyst expected the bank to lift the rate by 50 basis points to 4.75%, while another forecast it would stay unchanged.

Known as Banxico, the central bank in June unexpectedly raised the rate by 25 basis points to 4.25%, saying the increase was needed to avoid adverse effects on inflation expectations.

Annual inflation in July slowed to the lowest in four months, at 5.81%, but still overshot expectations to stay above the bank’s target. Banxico aims for a rate of 3% with a one- percentage-point tolerance threshold above and below that.

Banorte said in a report that one or two of Banxico’s board members might vote to keep rates unchanged, but that a unanimous vote in favor of raising borrowing costs appeared more likely.

Banxico will publish its monetary policy statement on Thursday at 1 p.m. (1800 GMT).

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