Mexico Inflation At 21-Year High, Central Bank Seen Hiking Rates Again

• Mexican headline inflation and the closely-watched core index rose in April to their highest levels since January 2001. This data is likely to prompt the central bank to hike its key interest rate again this week. 
• Consumer prices rose 7.68% in the year through April, and in the month alone increased by 0.54%, according to non-seasonally adjusted figures. The annual figure was still far above the Bank of Mexico's (Banxico) target of 3%, plus or minus one percentage point, and higher than the forecasts of 7.72%, according to a Reuters poll. 
• Banxico has increased its benchmark interest rate by 250 basis points over its last seven monetary policy meetings to 6.50% as it has struggled to contain rising inflation. Notably, Nikhil Sanghani, emerging markets economist at Capital Economics explained that “growing inflation risks, alongside the more hawkish U.S. Fed policy actions, will put pressure on Banxico to continue its tightening cycle.” Consequently, he expects Banxico to hike the key rate by 50 basis points to 7.0% this week.

(Source: Reuters)