Mexican central banker sees "a way to go" on rate hikes

BY Reuters | ECONOMIC | 05/13/22 06:11 PM EDT

MEXICO CITY, May 13 (Reuters) - Bank of Mexico board member Jonathan Heath said on Friday that given the inflation outlook, there is still a "way to go" on tightening monetary policy, following the central bank's latest 50 basis points rate hike to 7.0% this week.

"By increasing the monetary policy rate by 50 basis points, the monetary stance returns to neutral territory. I think the stance consistent with the current inflation scenario should be restrictive, so there is still a way to go," he said on Twitter.

Banxico, as Mexico's central bank is known, has increased its benchmark rate by 300 basis points over the last eight monetary policy meetings as it struggles to get inflation to its target of 3%, plus or minus one percentage point.

In a hawkish statement on Thursday, Banxico said that given the complex outlook for inflation "taking more forceful measures to attain the inflation target may be considered." (Reporting by Anthony Esposito Editing by Dave Graham)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

fir_news_article