Is this a sign of things to come to the United States in the next few years?
The Mexican central bank announced this week that it would be raising its interest rates by 50 basis points to 6.25 percent, an eight-year high. In order to combat a weakening peso and rising price inflation, especially in gasoline prices, the Mexican central bank hiked its key benchmark interest rate.
According to the latest data, Mexico’s annual inflation surged to 4.72 percent in January, a rate much higher than initially anticipated by the government and economists.
Central bank Governor Agustin Carstens noted that the rate hikes would have very little impact to economic growth.
“We think that it shouldn’t be considerable, above all due to the fact that we are starting with rates at a historically low level,” he said.
Last year, the Mexican central bank raised rates five times for a total of 250 basis points. It came when the peso had tumbled to all-time lows against the United States dollar.
Speaking of the greenback, this could be in store for the nation’s future. With the exorbitant growth of the money supply and price inflation gradually seeping into the national economy, the Federal Reserve may have no other choice but to raise rates by immense numbers in order to fight the inflation.
With President Donald Trump planning to spend like a drunken sailor and the central bank arguing that it would need to spend $4 trillion to fight the next recession, the dollar is in for some tough times.
If the out of control spending of BHO and Congress over the last eight years did not move inflation higher why would it now. With the tax breaks coming, prices should stay the same or go down.
Just kidding, we all know that any savings on the corporate side will go to the rich and the average citizen will continue to see their standard of living drop, like it has for the last 40 years.