November 14, 2016 / 6:47 PM / 2 years ago

Mexico central bank seen hiking after peso's Trump tumble

MEXICO CITY, Nov 14 (Reuters) - Mexico’s central bank is expected to hike interest rates on Thursday after the election of Donald Trump as U.S. president sparked a historic tumble in the peso currency that threatens to fan inflation.

The central bank will raise its benchmark interest rate by half a percentage point to 5.25 percent, according to the median of a Reuters poll of 15 analysts.

Eleven analysts expected a half-percentage point increase, three saw a 75 basis point hike and one bank expected a full percentage point increase.

Mexico’s peso sank to a record low last week after it saw its biggest two-day loss since a 1995 devaluation. The peso has lost more than 6 percent since the central bank last raised its benchmark interest rate in late September.

The peso had been pressured since mid-August whenever Trump gained ground in polls. Trump has threatened to unwind a free trade deal with Mexico and to block the money sent home by migrants to pay for a border wall.

The central bank has lifted borrowing costs three times already this year in half-percentage point hikes in a bid to support the peso, which has also been hurt by concerns about rising government debt.

Mexico’s annual inflation rate rose past the central bank’s 3 percent target level in October for the first time in over a year and a half and analysts expect the peso’s recent losses could drive further price increases.

The central bank will issue its decision on Thursday at 1 p.m. local time. (1900 GMT)

Reporting by Miguel Angel Gutierrez

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