It was made known by Bank of Mexico (Banxico) an increase in the interest ratein 50 base points to be located in 7%which means that money in the country becomes more expensive and is applied as a measure to contain the upward pressures in the consumer prices of the various products and services of the mexican economy.
The effect of inflation has made its most obvious symptom felt in the pockets of Mexican families, but a series of internal and external factors have contributed to this situation, where new outbreaks of COVID-19 in China and the extent of the conflict between Russia and Ukraine dominate the international scene.
This last factor drives the rise in the cost of energy in world markets, which is part of the products whose sustained rise pushes other production costs up and finally this is passed on to the consumer in the form of higher prices – and makes up what It is known as Underlying inflation.
The autonomous body reported that its Governing Board voted on this decision, readjusting the Interbank Interest Rate at its new level to start its validity from this Friday, May 13, 2022.
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Taking into account the size and characteristics of the factors that drive price increases, the governor and deputy governors of the central bank analyzed the situation of the Mexican economy and the causes of the phenomenon in order to implement measures to reduce inflationary pressures, taking care not to price formation or growth expectations for the country, in the medium or long term, are affected.
The most complex situation in which monetary and financial conditions in the world become more rigid, and the risks that this entails when the markets face uncertainty regarding the agents that cause the rise in the markets, was not left out of the analysis. such as the situation of the pandemic and the conflict in Ukraine, as we have already seen.
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In Banxico’s deliberation, the increase in the reference rate was voted with a majority that favored an advance of 50 basis points, with which the monetary authority in Mexico follows the line with which it will seek to reduce the rate of inflation back to its target level, in the order of 3% to get an adequate adjustment of the economy, as well as of the markets.
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