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Mexico lifts interest rate on slowing world economy, political uncertainty

Mexico lifts interest rate on slowing world economy, political uncertainty

Mubasher: Mexico’s central bank lifted its benchmark interest rate, citing the slowdown in global economy and political uncertainty in the country.

The Bank of Mexico raised the rate by 0.25 points to 8%, approaching an all-time high of 8.25% reached in 2008.

The central bank ascribed the move to growth projections for the global economy for this year and next.

In addition, the bank pointed to worries over the how the arrival leftist President-elect Andres Manuel Lopez Obrador, who is due to take office on 1 December, would impact Latin America’s second largest economy.

Obrador sent a shudder of fear among investors in recent weeks by cancelling a $13 billion airport project for Mexico City after putting the matter to a vote.

The airport referendum “led several ratings agencies to change their outlook for the country's sovereign debt from stable to negative,” the central bank said.

Mexico’s inflation rate decelerated slightly to 4.9% last October, but remained above the central bank’s target ranging from 2% to 4%.