Mexico Raises Key Rate More Than Expected After Brexit Vote
- Peso fell briefly to record after U.K. referendum last week
- Policy makers veer from Fed path for second time this year
Why Mexico Broke With Fed and Raised Rates After Brexit
Mexico raised its key interest rate after the peso plunged on the U.K.’s vote to leave the European Union, outweighing concerns revealed in the same central bank decision of a weaker domestic economy. The currency rallied.
Banco de Mexico increased the overnight rate a half-point to 4.25 percent Thursday, saying that while the nation’s growth outlook has deteriorated, worsened global economic conditions could impact prices. The median forecast of 26 economists surveyed by Bloomberg was for for a quarter-point increase. With nine analysts predicting no change and the rest divided between a quarter-point and half-point increase, forecasts deviated more than for any other decision since 2013.