Mexico raises interest rates for the fourth consecutive time

Mexico’s central bank has increased interest rates by a quarter-point for its fourth consecutive meeting, maintaining a steady adjustment pace despite an unprecedented rise in the rate at inflation levels climbed.

Policymakers, led by central bank Governor Alejandro Diaz de Leon, cast a split 4-1 vote to raise the key rate to 5% on Thursday, as forecast by 18 of 26 economists who participated in a Bloomberg survey. The other eight analysts had expected that the five-person board would go for a bigger half-point increase.

“The balance of risks for the trajectory of inflation within the forecast horizon deteriorated and remains biased to the upside,” board members wrote in a statement acquired by Bloomberg.

Diaz de Leon, together with board members Galia Borja, Irene Espinosa, and Jonathan Heath, voted in favor of the rate hike, while Gerardo Esquivel was the dissenting voice in favor of retaining the former rates as in the last three decisions.

The peso pared gains after the resolution was announced and traded flat at 20.6309 per dollar at 1:57 p.m. in Mexico City.

Banco de Mexico, also called Banxico, has been cautiously but progressively pushing up interest rates since June, the first tightening cycle since late 2015 to 2018, in a bid to control inflation that’s remained around 6% since April, to the amazement of policymakers.