MEXICO CITY – Mexico’s central bank decided Thursday to raise its interbank interest rate by one-half per cent to 5.25 per cent, citing “a more complex world economic panorama, caused among other things by the U.S. elections.”
The decision was the second time in as many months the Bank of Mexico has raised the rate.
In September, it raised the rate a half-point to 4.75 per cent, seeking to shore up a weak peso.
The volatile peso has depreciated significantly against the U.S. dollar.
Some analysts had been expecting a larger increase, given uncertainty surrounding the U.S. presidential election of Donald Trump.
Trump has pledged to renegotiate the North American Free Trade Agreement, deport millions of migrants and build a border wall.
The peso’s interbank exchange rate weakened from 20.34 to $1 to 20.41.
Financial consulting firm Banco Base said Thursday it is unlikely that the peso stabilizes in coming days due to expected changes un U.S. monetary policy and uncertainty about the incoming administration of President-elect Donald Trump.