(Adds Moody's comment)
By Brendan O'Boyle and Anthony Esposito
MEXICO CITY, Feb 9 (Reuters) - The Bank of Mexico's
five-member governing board unanimously voted to increase the
benchmark interest rate by 50 basis points to 11.00% on
Thursday, above market forecasts, citing a complex inflation
scenario and suggesting future hikes would be smaller.
The decision by Banxico, as the central bank is known, comes
hours after data showed consumer prices in Latin America's
second largest economy rising in January above December readings
and market expectations.
"Given the dynamics of core inflation, on this occasion it
is necessary to continue with the magnitude of the reference
rate adjustment of the previous policy meeting, in order to be
in a better position to tackle a still-complex inflation
environment," Banxico said in its post-meeting statement.
After the bank moved, Mexico's peso currency strengthened,
up 0.84% versus the U.S. dollar.
Banxico had been widely expected to increase the key rate by
25 basis points, following in the footsteps of the U.S. Federal
Reserve.
"The decision was unanimous. The authority is thus sending a
strong message in its fight against inflation," CI Banco wrote
in a note to clients.
Banxico has now raised its benchmark interest rate by 700
basis points during the current hiking cycle, which began in
June 2021, as inflation surged past its target of 3%, plus or
minus 1 percentage point.
While inflation has been easing since hitting an over
two-decade year high of 8.70% in August and September, it still
remains far above Banxico's target.
Banxico suggested that while its rate hiking cycle was not
over, future increases could be smaller.
"The board considers that, given the monetary policy stance
already attained and depending on the evolution of incoming
data, for its next policy meeting, the upward adjustment to the
reference rate could be of lower magnitude," the Mexican central
bank said.
Moody's Analytics director Alfredo Coutino, the only analyst
in a Reuters poll to correctly forecast a 50 basis points hike,
said the board's decision "goes in the right direction" for
curbing inflation.
"We consider it's not yet possible to say that the
rate-hiking cycle has reached its end," he added in a statement
after Banxico's announcement.
(Reporting by Anthony Esposito and Brendan O'Boyle; Additional
reporting by Noe Torres; Editing by Chris Reese, Diane Craft and
Jonathan Oatis)
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