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Mexico raises key interest rate

Staff writer |
Mexico's central bank raised its key interest rate for the first time in seven years to protect the peso after the U.S. Federal Reserve hiked its own benchmark rates.

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Banco de Mexico increased the interbanking rate by a quarter-point to 3.25 percent, one day after the Fed hiked its key federal funds rate for the first time since 2006.

The bank said that its first rate hike since August 2008 was "mainly in response" to the Fed's decision to increase the US rate from near zero to 0.25-0.50 percent.

Failing to increase Mexico's rate "could generate an additional depreciation" of the peso against the dollar and affect inflation, the statement said.

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