This has responded to a combination of factors, including of course the higher federal funds rate, but also a preventive response by the Banco de México during 2016 to the potential impact of the significant depreciation of the peso on domestic prices and, since early this year, the need to avoid second round effects from an inflation spike deriving from the liberalization of energy prices, an adjustment of the minimum wage and a more evident pass-through from the exchange rate to prices.5 Thus, from late 2015 to March 2017, the reference rate has been increased on 8 occasions, to a level of 6.5 percent.
The monetary policy framework adopted in Mexico in recent years has been fundamental to preserve macroeconomic stability in a context of highly volatile capital flows and severe external shocks, such as the sharp decline in oil prices, bouts of uncertainty in international financial markets linked to geopolitical or other factors, the increase in interest rates in the United States and the results of the electoral process in that country.