Mexico’s inflation rate rose to 7.91% in January, leading the country’s central bank to raise its key interest rate to 11% on Thursday.
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The Bank of Mexico said that inflation will not fall as expected and will likely remain elevated for some time. The bank said Mexico’s inflation rate will not likely drop to its official 3% target until late 2024 or early 2025.
Vendors at a Mexican festival await customers as inflation in the Central American nation rises. (AP Photo/Fernando Llano, Files)
The bank said underlying inflation showed an “astonishing” rise to 8.45%. Food products have seen annualized inflation of 14%, threatening to wipe out much of the 20% annual increase in minimum wages announced for 2023.
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The central bank interest rate is at its highest level since 2007. The Mexican peso rose 0.9% against the US dollar on Thursday to close at 18.77 to $1.
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The bank said in a statement that “global risks include a pandemic, persistent inflationary pressures, heightened geopolitical tensions, and tighter monetary and financial conditions.”
