Fiscal dominance refers to the process in which central banks deviate from their objective to support the state of the Public finances.
Last December, in the minutes related to the monetary policy decision of the Bank of Mexico (Banxico) in which the reference rate was raised 50 basis points, one of the members of the Governing Board expressed concern about the impact that the increase in interest rates will have on the public spending.
At the cut of the last monetary policy decision, the interest rate in Mexico stands at 5.50 percent.
