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Mexico central bank to take cue from Fed moves: minutes

Published 07/06/2017, 11:23 AM
© Reuters. A picture illustration shows Mexican pesos and U.S. dollars banknotes in Mexico City

By Gabriel Stargardter and Anthony Esposito

MEXICO CITY (Reuters) - The majority of Mexico's central bank board believes it is crucial to maintain the nation's relative monetary policy stance with the United States now that the Federal Reserve has begun raising rates, according to minutes of the bank's June 22 meeting released on Thursday.

"Most members said that given the recent interest rate increase by the Federal Reserve, it is indispensable right now to maintain the current relative position," the statement said.

Nonetheless, most members also said there could be a pause in the bank's rate hike cycle, considering that consumer price movements appear to be helping inflation reach the bank's 3 percent target.

Mexico's central bank board raised interest rates a quarter percentage-point to 7.00 percent at last month's meeting, with one member voting to hold them steady.

The central bank has increased its main interest rate in the last seven meetings. Monetary policy is at its tightest since early 2009, and inflation is at a more than an eight-year high.

Policymakers said in their statement last month that with the latest hike, rates "have reached a level that is consistent with the process of efficient convergence of inflation to the 3 percent target," but they said they would be vigilant.

A majority of members said the June rate move would help bring inflation down toward the bank's target.

The board raised the rate both to anchor inflation expectations and because of the Fed hike, a majority of members said.

© Reuters. A picture illustration shows Mexican pesos and U.S. dollars banknotes in Mexico City

The Fed voted in June to raise rates for the second time this year.

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