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Mexico interest rate uptick tied to drought
Mexico links interest rate, drought
by
MAYA AVERBUCH AND NACHA CATTAN BLOOMBERG NEWS (WPNS
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July 4, 2021 at 2:06 a.m.
Dried land near the Villa Victoria Dam, the main water supply for Mexico City in Villa Victoria, Mexico, in early May.
(Bloomberg (WPNS)/Alejandro Cegarra)
Mexico s central bank raised an unusual red flag when it upended markets with a surprise interest rate increase last month: Drought may pressure farm prices, it warned.
It was the only new item the central bank, known as Banxico, listed among inflation risks on the day it lifted borrowing costs for the first time since 2018. The worst drought in decades, according to NASA, may have persuaded policymakers to turn hawkish, central banker Gerardo Esquivel said in a subsequent interview.