Today, the Governing Board of Banco de México has decided to increase the objective of the Interbank Interest Rate by 75 basis points, reaching 7.75% and which will come into effect on June 24, 2022, being a historical increase by part of the Central Bank within the last 25 years.
Banxico mentions that, during the second quarter of the year, the indicators point to a slowdown in global economic activity. Inflation has positioned itself at 7.88% during the first half of Junethis indicator was mainly affected by bottlenecks in the global supply chain, causing high food and energy prices.
During the last session of the United States Federal Reserve, it decided to increase interest rates by 75 base points, so now the range of the Funds is between 1.5% and 1.75%in addition to anticipating future increases.
On the side of the domestic financial markets, the exchange rate remained within an orderly behavior, while short- and long-term interest rates increased.
The Central Bank forecasts that for the second quarter of 2022 a gradual recovery in economic activity persistseven so, emphasizes the uncertainty of the environment, with slack conditions that are estimated to continue to decrease gradually.
In the same way, Banxico considered the greatest challenges facing the country’s monetary policy in view of the tightening of global financial conditions, the environment of heightened uncertainty, inflationary pressures related to the conflict in Russia and Ukraine and the resurgence of COVID-19 in China that open up the possibilities of having greater effects on inflation.
“Based on this, and with the presence of all its members, it unanimously decided to increase, on this occasion, by 75 basis points the target for the overnight Interbank Interest Rate to a level of 7.75%.”