Peso strengthens as Mexico’s president prematurely announces rate hike

The peso rose versus the U.S. dollar Thursday after news reports said Mexican President Andres Manuel Lopez Obrador announced that monetary policy makers had voted to raise a key interest rate by half a percentage point to 6.5% hours before the announcement was due from the Bank of Mexico. “Yesterday here in Mexico, the Bank of Mexico raised the interest rate by point-fifty. We’re going to have an interest rate of 6.5%, because when they raise interest rates, there’s less investment and inflation is supposed to come down,” López Obrador said, according to Dow Jones Newswires. “Yesterday’s decision was taken at the Bank of Mexico by unanimity, and we respect the Bank of Mexico’s autonomy,” he said. The report said the Bank of Mexico declined to comment. The decision was due to be announced at 3 p.m. Eastern. Economists were looking for a half-point rate hike. The U.S. dollar traded at 20.124 pesos USDMXN, -0.27% down 0.5%, according to FactSet.

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