Analysts shocked as Mexico’s central bank clocks rise in inflation and cuts interest rates

MEXICO CITY (AP) — Analysts are expressing shock at a decision by Mexico’s central bank to cut interest rates on the same day that official figures showed a sharp rise in domestic inflation. Almost without exception, central banks raise interest rates to make money more expensive, in order to discourage price increases. But in a decision Thursday, the Bank of Mexico cut interest rates by 0.25% to 10.75%, even though inflation rose by over one percent to 5.57% in July.  Inflation has been getting further away from the central bank’s objective of 3%. The bank justified the move, saying prices hikes occurred in more volatile sectors like energy and food.