Economy

Bank of Mexico concerned about facing inflation, Fed normalization at same time

Mexican consumer prices rose 6.24% in the year through October, twice the inflation targeted by Bank of Mexico

Mexico inflation
The facade of the Bank of Mexico building is pictured in downtown in Mexico City, Mexico February 28, 2019. Photo: REUTERS/Daniel Becerril

The Bank of Mexico‘s governor Alejandro Diaz de Leon said on Friday that the most complex scenario for the bank would be to face the inflationary challenge and normalization of U.S. monetary policy in an intense and simultaneous manner.

Mexican consumer prices rose 6.24% in the year through October, twice the Bank of Mexico inflation target of 3% plus or minus one percentage point, which led to a hike in the benchmark interest rate by 25 basis points on November 11 for the fourth straight policy meeting.

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Last Friday, the International Monetary Fund (IMF) said that the country has agreed a new flexible credit line over two years worth some $50 billion.

The previous credit line with the IMF was worth around $61 billion, and Mexico had expressed a desire to pursue a further reduction in the level of access at a mid-term review next year, the Washington-based fund said in a statement.

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