LatAm: Interest rates in Mexico creep to new highs

Mexico’s central bank has announced a new interest rate hike in a bid to tackle inflation, raising the key rate by 0.25% to 7.5%.

The unanimous decision from the Banco de México’s board members takes the rate to its highest level in nine years.

The move marks the second consecutive rise and was largely expected as the central bank intensifies its efforts to tackle rising inflation.

After a record high December, inflation slowed to 5.55% in January, though it is still well over the bank’s 3% target. Banco De México aims to bring inflation within its target range in early 2019.

The increases are likely to put pressure on consumers with credit products, with Mexico’s financial consumer protection body revealing that there are around 1500 variable and fixed rate loan products in the market.

According to RFi Group data, 3 in 5 Mexican consumers are worried that they will be hit by interest rate changes over the next 12 months, reflecting the level of concern in the market.

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