Mexico's central bank hikes interest rate to 6.75 pct to fight inflation

MEXICO CITY, May 18 (Xinhua) -- Mexico's central bank (Banxico) made its third adjustment of the year to its monetary policy on Thursday, raising its benchmark interest rate from 6.5 to 6.75 percent in order to halt the rise of inflation.

"Despite favorable developments that have generally been observed in national financial markets, uncertainty remains in the external environment," said Banxico in a statement.

Mexico's inflation rate, which stood at 5.82 percent in April, has been affected by a number of factors in the first months of 2017, including hikes in fuel prices, passenger transport fares and certain agricultural products.

According to Banxico, the Mexican economy faces a "very complex environment," with the bank recommending that the country's macro-economic fundamentals should be strengthened, public finances should be consolidated and the monetary policy should be adjusted.

The bank will also remain attentive concerning the evolution of the monetary relationship between Mexico and the U.S., as part of its ongoing mission to bring inflation to three percent.

In 2016, the institution raised interest rates five times, to combat inflation as well as to control a fluctuating exchange rate. The peso slumped to a record low against the U.S. dollar after Donald Trump was elected as U.S. president last year, due to his stern rhetoric toward Mexico.

Mexico on Thursday responded positively to news that the U.S. government had formally notified Congress of its intent to renegotiate North American Free Trade Agreement. These renegotiations could play a major role in determining Mexico's future economic outlook.

[ Editor: meng ]
 

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