Mexico shocks markets with rate rise

The Bank of Mexico opted to unexpectedly raise rates a quarter point and revise its projections for inflation upwards.

The decision puts Mexico's benchmark overnight lending rate at 7.75%, its highest level since February 2006. The central bank was expected to hold rates as a result of events north of the border.

The central bank noted that US economic activity remained weak but said that Mexican growth remained relatively stable in the first quarter of 2008 despite growth slowing in its most