MEXICO CITY (Reuters) – Mexico’s public finances could handle higher interest rates, a senior finance ministry official said on Thursday as the country faces an uptick in price pressures that have taken inflation significantly above the central bank’s target rate.
“There’s scope to support, were it to occur, increases in interest rates without pressuring public finances,” said Ivan Cajeme Villarreal, head of economic planning at the ministry.
Villarreal was speaking at a news conference on public finances in which Deputy Finance Minister Gabriel Yorio said the recent rise in inflation did not appear permanent.
Inflation accelerated faster than expected in the first half of April to 6.05%, the highest level in more than three years.
The central bank targets a rate of 3%, and has a one-percentage point tolerance range above or below that, so the jump in inflation has encouraged speculation that the bank may have to raise interest rates again before too long.
(Reporting by Anthony Esposito and Sharay Angulo; Editing by Alistair Bell)
