The News
The News
Friday 15 of October 2021

Interest Rate Hike Could Affect Mexico's Private Sector


Banxico's decision will increase financial and operating costs for the private sector,photo: Pexels
Banxico's decision will increase financial and operating costs for the private sector,photo: Pexels
The decision by Mexico's central bank to raise interest rates by half a percent may be necessary to combat inflation, but it could also hurt business

The decision made by the Governing Body of Mexico’s central bank (Banxico) to increase the Interbank Balance Interest Rate by .50 percent might be a positive, accurate and necessary measure, but it has still caused complaints from Mexico’s private sector.

During an interview with reporters, president of the Confederation of Industrial Chambers (Concamin) Manuel Herrera Vega pointed out that these measures are set to maintain macroeconomic stability and are “timely and adequate” to reduce inflationary pressure, but might create an additional burden on companies by increasing operating costs.

“We know this measure is necessary during these times of great economic instability and international swings, however, it is the fourth time that interest rates have been increased, which will obviously have an impact on companies and their financial costs. I believe that this increase is necessary to balance macroeconomic stability in the country, and therefore, beneficial,” said Herrera Vega.

Likewise, vice president of the National Chamber of the Transformation Industry (Canacintra) Raúl Rodríguez Márquez stated that the increase of interest rates seeks to keep inflationary expectations and price hikes — both key to macroeconomic stability — under control.

Rodríguez Márquez mentioned that the disposition will challenge industries to keep up with the pace set by investment, employment and economic growth.