Bank of Mexico hikes rate to record high 8.5% as inflation bites

Credit: REUTERS/Daniel Becerril

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MEXICO CITY, Aug 11 (Reuters) - The Bank of Mexico hiked its benchmark interest rate by three-quarters of a percentage point to a record rate of 8.5% on Thursday, mirroring the U.S. Federal Reserve's most recent policy decision as inflation surged to an over two-decade high.

The five board members of Banxico, as the central bank is known, voted unanimously for the second 75 basis points rate hike in a row, saying the board would "assess the magnitude of the upward adjustments in the reference rate for its next policy decisions based on the prevailing conditions."

Banxico has now increased rates by a total of 450 basis points over the course of its last 10 monetary policy meetings.

Annual inflation in Latin America's second-largest economy climbed to 8.15% in the year through July, its highest level in nearly 22 years.

Banxico said Thursday that the balance of risks for the trajectory of inflation "remains biased significantly to the upside."

The rate increase, which was in line with expectations in a Reuters poll, brings the key rate to its highest level since Banxico's current regime was put in place in 2008.

(Reporting by Anthony Esposito, Edited by Isabel Woodford and Rosalba O'Brien)

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