Bank of Mexico governor says pace of hikes could change as needed

ACAPULCO, Mexico, March 25 (Reuters) – The Bank of Mexico does not need to strictly follow the U.S. Federal Reserve’s planned interest rate hike path and can tighten monetary policy at its own pace as it seeks to curb inflation, the central bank governor said. Reuters on Friday.

The five-member board of Banxico, as the central bank is known, voted unanimously to raise the benchmark interest rate by 50 basis points to 6.5% on Thursday, the seventh straight hike. It was also the third consecutive increase of 50 basis points. Read more

“We are of course concerned first about the inflation we are seeing,” said Victoria Rodriguez, who took over the reins at Banxico in January, in an interview on the sidelines of an annual banking conference in the seaside resort of Alicante. Acapulco.

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She noted that the policy trajectory of the Fed was an “important variable” for Mexico but not the only one and that inflation had been rising for 15 consecutive months.

“It’s not like we decided beforehand to match one by one” the Fed’s expected rate hikes, Rodriguez said.

Inflation reached 7.29% in the first half of March, slightly lower than the previous two-week period, but more than double Banxico’s target rate of 3%. The bank has a tolerance margin of one percentage point above and below the target.

“We don’t know yet if we’re going to maintain this pace (of rate hikes) or another. That will be what is needed to meet our mandate of a 3% inflation target,” Rodriguez said.

Rodriguez expects inflation to peak in the first half of 2022 and then begin a downward trajectory towards the target in the first quarter of 2024.

However, risks and uncertainty increased following Russia’s invasion of Ukraine, which fueled higher energy and grain prices.

“As far as inflation is concerned, there could be a significant impact…we will pay attention to what is happening and if we see an impact on inflation, we will take the necessary measures,” Rodriguez said.

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Reporting by Anthony Esposito; Editing by Sandra Maler and Sam Holmes

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