Factbox-Hold or hike？ Latin American central banks wield rates to battle rising prices

MEXICO CITY (Reuters) – A stubborn surge of inflation has caused central banks worldwide to adapt monetary policy to protect people and businesses from price increases, with many raising interest rates in step with the U.S. Federal Reserve.

As countries begin to diverge in strategies, here are the latest rate decisions from Latin Americas top economies:

Biggest markets

* Brazils central bank decided at a February meeting to keep its Selic benchmark interest rate at 13.75%. It paused its aggressive tightening cycle in September following 12 straight rate hikes.

Consumer prices in Latin America‘s largest economy rose more than expected in mid-February, at 5.63%, ahead of the bank’s target of 3.25% in 2023, plus or minus 1.5 percentage points.

* Mexicos benchmark interest rate stands at 11.00% after the central bank increased it by 50 basis points (bps) the second week of February, bringing its rate 700 bps higher than when it began hiking in June 2021.

Annual headline inflation in the regions second-largest economy accelerated to 7.91% in the 12 months through January, slightly ahead of forecasts. The central bank aims to bring inflation down to 3%, plus or minus one percentage.

South america

* Argentina is battling one of the highest inflation rates in the world, with annual price rises nearing 100%. As locals struggle to keep up with daily price increases, the central bank since September has maintained its benchmark rate at 75%.

The rate was at 38% for most of 2021.

* Chiles central bank at its latest meeting decided to keep its benchmark rate at 11.25%, maintaining the same level since October when it paused a series of hikes that added up to 1,075 bps since July 2021.

The Andean nation saw inflation accelerate faster than expected to reach 12.3% in January.

* Perus central bank maintained its benchmark interest rate at 7.75% in February, unchanged from a 25-bps hike a month earlier. Battling the highest inflation in a quarter of a century, policymakers in the copper-producing nation had raised rates periodically from mid-2021, when the rate stood at just 0.5%.

Annualized inflation stood at 8.65% in February, inching slightly below the January figure, but still well ahead of the institutions 1% to 3% target range.

* Colombias central bank raised its benchmark interest rate by 75 basis points to 12.75% at its latest meeting, bringing its tightening cycle up 1,100 bps since September 2021.

The country, which is facing the highest inflation recorded since 1999, in February posted annualized inflation of 13.28%, far above the banks 3% target.

(Compiled by Aida Pelaez-Fernandez; Editing by Leslie Adler)