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The Bank of Mexico shocked the market with a big interest rate hike - and the peso is soaring

Bob BryanJun 30, 2016, 23:44 IST

Mexico's Aida Roman takes an arrow from her quiver, in which a Mexican national flag can be seen, during the women's archery individual round of 8 eliminations at the London 2012 Olympic Games at the Lord's Cricket Ground August 2, 2012. REUTERS/Suhaib Salem

The Bank of Mexico unexpectedly hiked their key interest rate to 4.25% from 3.75% Thursday. Economists were only expecting a 0.25% hike from the central bank.

In response, the peso has soared against the dollar. It was stronger by 1.29% leap to 18.253 per dollar as of 2:27 p.m. ET.

The Bank said that despite weakness in the global economy and the recent exit of the UK from the European Union, the bank said in a statement that in order to keep inflation expectations anchored lower it felt it needed to hike its rate.

The bank, nicknamed Banxico, began hiking rates in December and hiked again in February.

More to come...

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