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Mexico Raises Rate More Than Expected as Peso Lags at Record

  • Carstens said Dec. 2 he’s ready to hike if CPI bets stay high
  • Banxico increase is fifth time in 2016, most for any year
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Mexico Central Bank Raises Rate More Than Expected

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Mexico’s central bank raised borrowing costs more than economists expected as policy makers look to jolt the peso from near record lows, saying rate increases this year will help inflation return to target.

Banco de Mexico, headed by Governor Agustin Carstens, increased the key rate by half a point to 5.75 percent. Only eight of 26 economists surveyed by Bloomberg beforehand expected a half-point increase, while 17 expected a quarter-point hike, and only one saw rates on hold. The peso erased losses and strengthened 0.4 percent to 20.3967 per dollar at 1:30 p.m. in Mexico City.