"Higher interest rates will weigh on Mexico's growth prospects at a time when the economy is already facing other headwinds," Moody's Investors Service Senior Vice President Gersan Zurita stated in the release.
Rising rates will also have an impact on corporates, which typically finance their working capital needs with short-term credit, the release explained. These lines will now have to be refinanced at higher rates through 2018.
Banco de Mexico, the country's central bank, has pushed up rates by 300 basis points since late 2015 to 6.25 percent, the release noted. Policy makers next meet on March 30 and it is likely that the rate hike cycle will extend through the end of this year, as the bank battles inflation.
Annual inflation rates in Mexico exceeded 5 percent in March, according to published reports.
