The Bank of Mexico (Banxico) followed in the footsteps of the United States Federal Reserve (Fed) and increased its interest rate by 75 base points, to leave it at a level of 7.75 percent.

This is an increase that has never been seen since the central institution, today in charge of Victoria Rodríguez Ceja, adopted the interest rate as an operational objective in 2008, in addition to being the highest level for it since November 2019.

“Since 2008, 127 monetary policy decisions have been made. During this period, the reference rate has been increased 27 times; 16 times at 25 basis points, 10 times at 50 basis points and now, for the first time, at 75 basis points,” Jonathan Heath, deputy governor of Banxico, posted on social media.

With this decision, there are nine consecutive increases in Banxico’s interest rate, which has intensified due to the persistence of high levels of inflation both in Mexico and the rest of the world, which is putting in check the income of households and the recovery of the economy.

The decision, according to the published statement, was made unanimously considering the magnitude and diversity of shocks that have affected inflation in recent months, and which have not dissipated.

“The Governing Board evaluated the magnitude and diversity of the shocks that have affected inflation and its determinants, as well as the risk that medium- and long-term expectations and price formation are contaminated. He also considered the greatest challenges for the conduct of monetary policy in the face of the tightening of global financial conditions, the environment of heightened uncertainty, the inflationary pressures associated with the geopolitical conflict and the resurgence of Covid-19 cases in China, and the possibility of greater effects on inflation,” Banxico said in its statement.

The data does not surprise the market, which expected an increase of this magnitude after the one made by the Federal Reserve in recent days; however, after the inflation figure for the first fortnight of June – 7.88% annual – was released hours before the decision was announced, some analysts suggested that a larger increase of 100 basis points was necessary.

According to data from the National Institute of Statistics and Geography (Inegi), in the first half of June consumer inflation accelerated to 7.88%, from the figure of 7.72% in the second half of May.


The statement states that, for the following monetary policy decisions, the Governing Board intends to “continue increasing the reference rate and will consider acting with the same forcefulness” if necessary.

In the previous meeting, on May 12, Governor Rodríguez Ceja pointed out – after the debate over whether or not the rate should rise more than 50 base points – that the central institution had on the table an increase higher than what they had been doing, for which Banxico was ready to be “more forceful” in case inflationary pressures persisted.

She was joined by Deputy Governor Gerardo Esquivel, who mentioned that the forcefulness with which Banxico will act means that they will not leave out of the discussion increases greater than those they have made. “But it is just that, having it on the table (…) does not imply a commitment to go in that direction,” he said, explaining that several factors influence decision-making.

At that time, only Deputy Governor Irene Espinosa was the member of the Governing Board who voted in favor of an increase of 75 basis points in the reference rate, arguing that it was necessary to act more firmly.

“The Governing Board will closely monitor inflationary pressures, as well as all the factors that affect the forecast trajectory for inflation and its expectations. This, with the objective of determining a consistent reference rate at all times, both with the orderly and sustained convergence of general inflation to the 3% target in the term in which the monetary policy operates and with an adequate adjustment of the economy and financial markets,” the central bank said in the statement.

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