Mexico raises interest rates

To curb inflation, Mexico has also raised interest rates by a quarter point to 4.5%.

Mexico’s GDP is ranked 15th largest (2 spots behind Australia’s) but the difference amongst its 127 million people is that it’s GDP per Capita is $9,000.

And so it remains, that inflation is a tax that the poor can’t afford to pay.

The poor don’t own assets like the rich. The poor are concerned about the cost of living, not amassing or owning assets.

But in ‘rich’ Australia (where the GDP per capita is $55,000), the larger concern is how rising interest rates will affect the servicing of its world leading 124% Household Debt to GDP ratio.

Mexico’s Household Debt to GDP is only 17%.

Recently Russia, Hungary, Czech Republic, Brazil have hiked rates.

https://www.global-rates.com/en/interest-rates/central-banks/central-banks.aspx

All of these nations have a Household Debt to GDP ratio below 37%.

Interest Rate policy in ‘rich’ countries may be behind the curve due to risk that rising rates will cause a decline in assets.

In the meantime, the rich will carry on paying for a higher cost of living, so to protect the value of their assets, ironically fuelled by cheaper debt.

August 15, 2021

by Rob Zdravevski

rob@robzdravevski

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