(Adds central bank comments)
MEXICO CITY, April 12 Mexico's central bank
board members thought they had tightened borrowing costs enough
to contain the risks from a slump in the peso and a hike in
gasoline prices with last month's rate hike, minutes showed on
Policymakers voted 5 to 0 to raise the bank's key rate by 25
basis points to 6.50 percent at their March 30
meeting, when they raised borrowing costs for the fifth meeting
in a row to a nearly 8-year high.
However, all members thought they had room to slow the pace
of hikes to a 25 basis-point move from a string of
half-percentage-point hikes after a big rally in the peso.
Most members believed the 325 basis points they had raised
rates since late 2015 was "an appropriate posture to face the
shocks that have been seen so far," the minutes said.
The Banco de Mexico raised rates in late March after the
U.S. Federal Reserve increased borrowing costs by a
One member thought that Mexico may not even need to hike
again when the Fed next moves but another member thought Mexico
may need to hike more later this year.
Mexico's annual inflation rate in March rose above 5 percent
to its highest in more than seven-and-a-half years, but minutes
showed most policymakers thought the rate should trend back
toward their 3-percent target by the end of next year.
Mexico had hiked interest rates to contain inflation after
the peso tumbled to successive historic lows.
But the peso has rallied back on bets that U.S. President
Donald Trump will not impose big tariffs on Mexican exports to
the United States, and as initial trade talks have taken a more
All members agreed that market conditions around the peso
had "improved greatly."
(Reporting by Michael O'Boyle and Gabriel Startgardter; Editing
by Alistair Bell)