Mexico’s central bank saw interest rate rise to 4.50%

MEXICO CITY, Aug.9 (Reuters) – Mexico’s central bank is expected to raise its benchmark interest rate at its next monetary policy meeting on Thursday, with inflation still well above policymakers’ target level, a Reuters poll found on Monday .

Seventeen of 19 analysts polled said they expected the Bank of Mexico to raise the rate 25 basis points to 4.50%. (MXCBIR = ECI) One analyst expected the bank to raise the rate by 50 basis points to 4.75%, while another expected it to remain unchanged.

Known as Banxico, the central bank unexpectedly raised the rate by 25 basis points in June to 4.25%, saying the increase was necessary to avoid negative effects on inflation expectations.

Annual inflation in July slowed to a four-month low at 5.81%, but still exceeded expectations to stay above the bank’s target. Banxico is aiming for a rate of 3% with a tolerance threshold of one percentage point above and below. Read more

Banorte said in a report that one or two of Banxico’s board members could vote to keep rates unchanged, but a unanimous vote for increased borrowing costs seemed more likely.

Banxico will issue its monetary policy statement Thursday at 1:00 p.m. (6:00 p.m. GMT).

Reporting by Miguel Angel Gutierrez; Editing by Bernadette Baum

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