MEXICO CITY, March 30 Mexico's central bank is
expected to raise its benchmark interest rate for the fifth
meeting in a row on Thursday, but following that, policymakers
are likely to slow the pace of hikes on the back of a rally in
The Banco de Mexico is set to raise rates by a
quarter percentage point to 6.50 percent, according to 15 of 24
analysts surveyed by Reuters. Seven thought the bank could
deliver a half-percentage point hike, while two expected no
Mexico's central bank has raised its benchmark rate in
50-basis point moves at all of its previous four meetings as the
peso tumbled to successive historic lows and threatened to fan
That has pushed the benchmark rate to levels not seen since
early 2009, when the bank was slashing borrowing costs amid a
global financial crisis.
But the peso has rallied back from a record low in January
on bets that U.S. President Donald Trump will not impose big
tariffs on Mexican exports to the United States and as initial
talks about trade have taken a more positive tone.
"Inflation continues to surprise to the upside, but
inflation worries have been mitigated by the remarkable rally in
the Mexican peso seen over the past couple of months," said
Gustavo Rangel, chief Latin America economist at ING in New
Mexico's annual inflation rate rose above 5 percent to a
nearly eight-year high in early March, but policymakers say it
should trend back toward their 3 percent target by next year.
Last week, central bank chief Agustin Carstens said the
peso's recovery will help inflation cool back toward 3 percent,
while also suggesting the peso could gain more ground.
The peso has gained about 10 percent since the central
bank's last decision on Feb. 9 and it is trading at its
strongest levels since Trump's election victory in November.
(Reporting by Michael O'Boyle; Editing by Bill Rigby)