The Bank of México raises its interest rate to a new high of 11%

After both headline and core inflation rose in January, Mexico’s central bank raised its benchmark interest rate by 50 basis points to a new record high of 11%.

At a monetary policy meeting on Thursday, Bank of México (Banxico) board members unanimously voted in favor of a 50-basis-point hike. The meeting came just hours after the national statistics agency INEGI reported annual headline inflation of 7.91% and core inflation of 8.45% in January.

The rate hike, which followed a 50-basis-point increase in December, was double what most economists predicted and double what the US Federal Reserve announced last week. Banxico outpaced the Fed for the first time in seven monetary policy decisions, causing the Mexican peso to gain ground against the US dollar.

Despite the central bank’s aggressive tightening cycle and the federal government’s efforts to put downward pressure on prices, inflation has remained stubbornly high.