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 Business News | January 2007 
Mexico Cenbank Holds Rates Steady, Warns of Hike
 Reuters
Mexico's central bank held its benchmark overnight interest rate steady at 7 percent as expected on Friday but said it would adjust rates if necessary after a recent spike in food prices.
Mexico's annual inflation rate has crept up to around 4 percent in recent months and the central bank made clear it would take action if needed, further raising expectations that it could push interest rates up at its next meeting in February.
“If there is a negative effect from the supply side shocks ... the board will adjust monetary policy as necessary to bring inflation back toward the target,” said the bank's policy-makers, who have set a long-term inflation goal of 3 percent.
They said the recent sharp rise in prices for corn tortillas and sugar would continue to pressure the inflation rate, pushing it up to between 4.0 percent and 4.5 percent in the first half of this year.
But the bank expects improvement from then on and said both headline and closely watched core inflation, which strips out energy and some food prices, would end 2007 at between 3.5 percent and 4.0 percent. |
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