Inflation Hits Highest in Mexico Since the Recession Elias Hubbard - Click Lancashire
go to original April 1, 2017

Bank of Mexico's Agustin Carstens says the peso is undervalued (Reuters/Yuri Gripas)

The peso slipped 0.5 percent after the board of the Banco de Mexico unanimously decided on Thursday to raise its benchmark rate by a quarter percentage-point to 6.50 percent, following four straight 50-basis-point hikes. Eight of the analysts had expected a larger half-point increase.

Mexico's central bank said on Wednesday it had transferred 321.7 billion pesos ($17 billion) of its 2016 surplus to the federal government, which will help the country pay down debt this year.

The Mexican peso weakened on Friday after the nation's central bank slowed the pace of interest rate hikes, triggering profit-taking after the currency's recent rally.

Mexico's annual inflation rate rose above 5 percent to a almost eight-year high in early March, but policymakers said on Thursday that it should trend back toward their 3-percent target by the end of next year.

The peso had fallen as low as 22 to $1 in January, when U.S. President Donald Trump took office. He also said that the peso is undervalued by as much as 10 percent, even if the "unknown" of bilateral relations with the U.S. is taken into account.

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Related: San Diego Business Leaders Team Up with Mexican Senators to Protect NAFTA (Nearshore Americas)

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