Central Bank of Mexico increases rates similar to the Fed

Last month in Mexico, there was a significant drop in inflation. Currently, the central bank of Latin America's second-largest economy slowed the pace of interest rate increases. It announced that it will continue raising borrowing costs in early 2023.

The head of the central bank of Mexico (Banxico) is governor Victoria Rodriguez. Banxico has raised its key rate by 75 basis points four times in a row. On Thursday, the last increase was a half-point to 10.5%, which is a record level.

Capital outflows could weaken the peso. The bank wants to prevent it, so it tries to maintain the difference in interest rates. For this reason, politicians have made six consecutive decisions, replicating those of the Federal Reserve System. Some economists assumed that the tightening cycle was over. However, all five members of the Banxico board are reporting that the tightening cycle will rise again at the meeting scheduled on February 9.