The Bank of Mexico just hiked rates.
Banxico, as the bank is usually called, hiked by 50 basis points to 6.25% in its latest interest rate decision, as most economists were expecting.
In the accompanying statement, the bank noted that emerging markets were facing greater uncertainty regarding fiscal, commercial, and migration policy that the new US administration has been considering.
This latest rate decision comes amid a recent slight recovery in the peso. The beleaguered Mexican currency is up by about 7% since the day before US President Donald Trump’s inauguration.
Additionally, inflation has started to pick up recently. Mexico’s consumer price index (CPI) increased by 4.72% year-over-year in January, marking the seventh consecutive month the rate has accelerated. This has been attributed primarily to rising energy costs following the government’s decision to raise gas prices by about 20% at the start of the year.
Thursday's decision marks the third consecutive time Banxico has raised rates since Trump's election in November. The bank hiked by 50 basis points at its November meeting, noting that the US election made the global economy "more complex." And then it hiked again by another 50 basis points in December, which was a more aggressive move than most had been expecting.
Both decisions followed a tumultuous autumn for the Mexican peso, which ended up being one of the big market casualties of the 2016 election.
The Mexican peso is up by 0.6% at 20.3494 per dollar as of 2:02 p.m. ET.