Mexico’s central bank hiked its benchmark interest rate by 50bp to 5.75%, a day after the US Federal Reserve raised rates by 25bp.

Banxico said the hike sought to “arrest additional inflationary pressures and to reinforce the contribution of monetary policy to the inflation convergence trend.”
The central bank also took into consideration the Fed’s 25bp rate hike on Wednesday, a statement from Banxico showed.
The Banxico monetary policy committee acted decisively in order to remain “ahead of the curve and preserved the core of forward guidance,”a research note from Goldman Sachs analysts said.
Going forward, Banxico expects higher global inflationary pressures and a less accommodating global monetary stance, the analysts said.
The decision strengthened the Mexican peso by 0.4% yesterday to MXN20.39 per dollar.
Banxico also said the inflation outlook had worsened but it sees price increases quickening next year before ending within the 2% and 4% range. It expected inflation to return to a target range between 1% and 3% by 2018.
Agustin Carstens said earlier this month that he would step down as Mexico’s central bank governor. He plans to leave the bank in July to lead the Bank for International Settlements in Basel, Switzerland.