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Mexico’s central bank unexpectedly raised its key interest rate for a sixth straight meeting to keep an increase in consumer prices from deepening after inflation accelerated to almost double policy makers’ target. The peso erased its loss. Banco de Mexico, led by Governor Agustin Carstens, lifted its benchmark by a quarter point to 6.75 percent Thursday, surprising most of the economists surveyed by Bloomberg.
The increase in borrowing costs is meant to help the central bank deal with the challenge of anchoring mid- and long-term inflation expectations, policy makers said in the statement accompanying their decision. The balance of inflation risks has shown some deterioration, and the possibility of additional weakness in the peso amid an environment of uncertainty about Mexico’s relationship with the U.S. remains a vulnerability, the board said.