Mexico raises key interest rate to 7 pct to combat inflation

by Noah Mcgee June 24, 2017, 0:09
Mexico raises key interest rate to 7 pct to combat inflation

The all-items consumer-price index in May rose 1.3% from a year earlier, Statistics Canada said Friday, following a 1.6% advance in the previous month. Many analysts now believe the bank will start moving the rate upwards from its historically low level of 0.5 per cent before the end of the year.

The data comes as the economy strengthens and the Bank of Canada prepares to make a scheduled interest rate announcement on July 12.

The latest inflation figures could play a key role in that decision.

Last month's smaller inflation number could weigh on the central bank's decision, as the rate moved further away from its ideal target of two per cent. That was down from 1.6 per cent in April. One member of the board voted to keep rates unchanged at 6.75 percent.

The bank's benchmark rate has been at 0.5 per cent for two years and hasn't been raised in almost seven years.

The bank is expecting that inflation will gradually increase to the 2.0% area as spare capacity within the economy is gradually eroded over the next few months.

"Certainly very modest core inflation continues to rumble in the background as a pretty strong reason for the bank not to rush the proceedings".

Sunday with double dose as Pakistan faces India in Cricket and Hockey
So, getting a win, and an impressive one at that, will be vital. "He asked us to bring more energy and aggression into our game", Manpreet said.

"On balance, I think that today's disappointing report deals a blow to what have been rising expectations that policy accommodation might begin to be removed as soon as July", said Josh Nye, an economist with RBC Economic Research.

The central bank's three measures of core inflation remained subdued.

"No matter where you look, overall inflation is roughly 1.3 per cent in Canada at this point", Porter wrote in a note to clients.

Bank of Canada policymakers took a more hawkish turn last week, setting the stage for rate hikes.

The Canadian dollar gained against the greenback and was trading at C$1.3253 or 74.45 US cents after Thursday's report.

Sales at gasoline stations rose 1.7 percent, the seventh increase in nine months as Canadians paid higher prices at the pump.

Food prices have fallen in the past year, contributing to a cooling rate of inflation, Statistics Canada says.


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