Bank of Mexico likely to hike key interest rate by 25 bps

The Bank of Mexico is set to meet today for its monetary policy decision. According to a Commerzbank research report, the Mexican central bank is expected to hike its key interest rate by 25 basis points to 7.50 percent, even though some argue that due to the peso’s recovery the central bank will keep the interest rate on hold.

But worries about inflation might have stayed high amongst the central bankers. To anchor inflation expectations the central bank is thus expected to take an action today. The appreciation of peso and the cautious optimism about the NAFTA negotiations have led to a certain relief. However, the uncertainties about NAFTA and the Presidential elections in Mexico continue to be very high. Therefore, the Banxico might leave the door open for additional rate hikes, stated Commerzbank.

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