Mexico raises key interest rate to 8.5%, highest in 16 years

MEXICO CITY (AP) — Mexico’s central bank has raised its interbank interest rate by 0.75% to 8.5% — the highest level in at least 16 years. The Bank of Mexico cited continuing inflationary pressures, and predicted inflation would peak at 8.5% in the third quarter. Authorities did not rule out future rate increases, and Intercam bank says in an analysis report that interest rates could hit 10% or more, depending on inflation. Mexico’s annualized inflation rate hit 8.15% in July, the highest in more than two decades. The Mexican peso gained ground against the dollar before the widely expected move to increase rates.